MIFID II was amended on 2 August 2021 to include language that defined three sustainability products/preferences as: – Taxonomy-aligned products: a financial instrument for which the client or potential client determines that a minimum proportion shall be invested in environmentally sustainable investments – “Sustainable investments” (as defined under the SFDR ): a financial instrument for which the client or potential client determines that a minimum proportion shall be invested in sustainable investments – Products with sustainability factors as specified by the client: a financial instrument that considers principal adverse impacts on sustainability factors, where qualitative or quantitative elements demonstrating that consideration are determined by the client or potential client N Negative screening Negative screening involves the exclusion of companies or countries from the investment universe on the basis of ESG scores, norms and criteria such as product involvement in controversial activities. It is a form of Sustainable and Responsible Investing (SRI) . Net Zero The term “net zero” derives from a 2013 IPCC report, which discussed the need to eliminate net greenhouse gas (GHG) emissions to stop global warming. The “net” relates to the balance between emissions generated by human activities and those removed either naturally or artificially through carbon-capture technologies. The report paved the way for the Paris Agreement in 2015, with each signatory pledging to meet the targeted equilibrium – “net zero” – by 2050 at the latest. Net Zero Asset Managers initiative The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius; and to supporting investing aligned with net zero emissions by 2050 or sooner. Market terminology AllianzGI Sustainable Investing – Glossary 12