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TCFD Report

2021 | 32 pages

TCFD Report - Page 1

Contents Executive summary 01 04 Introduction Risk management 04.1 Organization’s processes for 17 02 identifying and assessing climate Governance related risks 04.2 Organization’s processes for 19 02.1 Board-level oversight 6 managing climate related risks 02.2 Our sustainability governance 6 04.3 Processes for identifying, 23 structure assessing, and managing climate-related risks are 03 integrated into the organization’s overall risk management Strategy 03.1 Climate-related risks and 7 05 opportunities the organization Metrics and targets has identiifed over the short, medium, and long term 05.1 Metrics used by the organization 25 03.2 Impact of climate-related 10 to assess climate-related risks risks and opportunities on and opportunities in line with its the organization’s businesses, strategy and risk management strategy, and ifnancial planning process 05.2 Disclose Scope 1, Scope 2, and, if 26 appropriate, Scope 3 greenhouse gas (GHG) emissions, and the related risks 05.3 Targets used by the organization 30 to manage climate-related risks and opportunities and performance against targets 2 AllianzGI TCFD Report 2021

Executive summary Governance Allianz Global Investors (AllianzGI) Management and Supervisory Board members receive regular strategy updates of AllianzGI business and this includes a section on the latest strategic updates regarding sustainability, and climate change. Strategy We help our clients to relfect climate risks and opportunities in their holdings. In 2021 we adopted a ifrm-wide thermal coal exclusion policy for all mutual funds we manage. This s ection shows our innovative investment solutions, progress in sustainability research, policy advocacy, and our active industry and policy engagement. Risk management We have put in place further processes such as a tool for analysing sustainability risks and principal adverse impacts, including climate metrics. This section also includes information on climate scenario analysis and stress-testing. Metrics and targets After becoming a Net Zero Asset Managers (NZAM) initiative signatory in 2021, we submitted ifrst interim targets at the beginning of 2022, relfecting the targets set in 2021 by Allianz for its proprietary assets. In addition, we have also committed to reducing our greenhouse gas footprint as a business, covering energy-related emissions, business travel and paper use. AllianzGI TCFD Report 2021 3

01 Introduction Approach derived from TCFD principles Allianz Global Investors is an active investment Respondents to the 2022 World Economic Forum Global Alliance (AOA). In recent years, we have laid strong management ifrm and part of Allianz Group. Sustainable Risks Perception Survey ranked “failure of climate change foundations for our climate change strategy by supporting investing is a core part of our strategy to shape pathways mitigation and adaptation” as the number one risk with the TCFD recommendations and implementing them that secure the future – for our clients, for our business potentially the most severe impact over the next decade.2 and developing an enhanced systematic approach and for society as a whole. Climate risks are a major consideration in our assessment to investee engagement on climate noticeably with At AllianzGI, we manage EUR 673 billion (USD 765 of the value of any potential holding. Unlike traditional regard to disclosure. AllianzGI supports the climate billion) in assets for individuals, families, and institutions ifnancial risk factors, such as market price risks, assessing approach of Allianz SE, which has been further worldwide as at December 2021, of which EUR 303 billion 1 and quantifying climate change risks in investments is strengthened to fully phase out coal-based business encompass our ESG and sustainable investment offering. more diiffcult and complex. As an active investor, we can models across the proprietary investments and property We began our sustainable investing journey over 20 help to ifnd innovative ways to reallocate capital towards and casualty (P&C) insurance portfolios by 2040 due years ago and published our ifrst Responsible Investing a climate transition that supports the Paris Agreement to climate risk. Allianz SE has also set climate targets Report in 2018. Our reporting incorporates our investment goals. We are a signatory of the NZAM initiative to act for speciifc asset classes in the insured portfolios and and stewardship activities as well as our business on climate issues, present and future, jointly with other committed as an investor to the Science Based Targets operations. As part of our commitment to transparency investment industry signatories. Our aim is to decarbonise initiative (SBTi) among many other efforts. and accessibility, we produced our ifrst Task Force on investment portfolios and accelerate our contribution to Climate-Related Financial Disclosures (TCFD) report achieving net zero emissions and limiting global warming As an active asset manager, we not only embrace global last year to set out our climate-related risks and to 1.5 °C by 2050 or sooner. objectives of carbon neutrality, but also take actions to opportunities and how we integrate them into the This is alongside our parent company, who committed contribute to climate transition. Below are the key milestones business. We are pleased to issue our second TCFD to decarbonise its asset owner portfolio as a founding in AllianzGI’s commitment to climate leadership during report in response to the recommendations from TCFD. member of the UN Convened Net-Zero Asset Owner the reporting period (January – December 2021): 1. This figure includes EUR 156 billion of integrated ESG assets that are not considered sustainable according to EU Sustainable Finance Disclosure Regulation th 2. The Global Risks Report 2022 17 Edition Workd Economic Forum (Link) For more information see AllianzGI Climate Policy Statement and Exclusion Policy on our website 4 AllianzGI TCFD Report 2021

Introduction Core elements of recommended climate- related ifnancial disclosures* – Launched three strategic sustainability themes: – Carbon offsets: debate to deifne role in net zero, Governance climate change, planetary boundaries and December 2021 (Link) inclusive capitalism. – Added new policy on “Say on Climate” under our Climate-related issues in board oversight – Thermal coal (and controversial weapons) exclusion Global Corporate Governance Guideline (Link) Management’s role in assessment and management policy adopted ifrm-wide for all mutual funds that – Hosted major events such as AllianzGI Global we manage. Sustainability Days (24-25 November 2021) to provide Strategy – Joined the Net Zero Asset Managers initiative and clients with information and insights on climate submitted first interim targets at the beginning of Risk identification 2022 to help meet our net-zero 2050 commitment. AllianzGI became an oiffcial supporter of the TCFD Over the short, medium and long term – Launched a “Climate Engagement with Outcome recommendations in 2019 following its parent Impact of climate issues (CEWO)” investment strategy, where we engage company Allianz SE. This report follows the structure On business, strategy and financial planning with the top emitters to reduce emissions without of the TCFD recommendations along four pillars : resilience considering different climate scenarios constraining the investment universe. governance, strategy, risk management and metrics Risk management – Joined the One Planet Asset Managers and targets. (OPAM) initiative, which supports the One Planet The TCFD’s four-pillar framework provides guidance Processes for identifying, assessing and managing Sovereign Wealth Funds (OPSWF) to tackle the for companies on how to consistently disclose risks and climate-related risks challenges of climate change. opportunities from a changing climate as well as to How it is integrated into the organisation’s overal l – Published three thematic papers on the climate integrate them into their business. We strongly believe risk management change topic that, for investors to be able to make informed decisions, Metrics and targets – Are all net-zero goals created equal?, September companies must report comprehensively on how they 2021 (Link) tackle dominant global long-term trends, such as climate Metrics used in climate change strategy and – Oil and gas majors: active stewardship rather change. AllianzGI advocates for greater transparency risk management than divestment, October 2021 (Link) and reporting on climate change risks by companies. Disclosure of climate-related targets (including both investment-related and operation-related climate targets) *Implementing the Recommendations of the Task Force on Climate-related Financial Disclosures AllianzGI TCFD Report 2021 5

02 Governance 1. Board-level oversight The Executive Committee is the central governance on sustainable investing activities including climate AllianzGI is an investment management subsidiary and decision-making body for AllianzGI and other change at AllianzGI. It also advises the Investment of Allianz SE. As AllianzGI consists of various relevant committees on sustainability issues including Executive Committee and other relevant committees operational entities, lines of responsibility exist climate change. on sustainability issues including climate change. at the Allianz Global Investors GmbH level. AllianzGI The Investment Executive Committee has responsibility The Global Proxy Voting Committee ensures that our management board is responsible for the overall for all sustainability-related topics including climate global proxy voting practices relfect the industry best business strategy including sustainability strategy. change within investments. practice and that we fulifl our ifduciary and stewardship It reports to the Supervisory Board of AllianzGI. duties on behalf of our clients. Management and Supervisory Board members receive The Head of Sustainable and Impact Investing reports to the Global Head of Investment, who is a member of The Reputational Risk Working Group comprises regular strategy updates of AllianzGI business and the Executive Committee, thus anchoring sustainable global representatives from across functions who meet this includes a section on the latest strategic updates and impact investing at the top of the organisation. semi-annually to proactively discuss topics that may pose regarding sustainability, including climate change – a reputational risk and determine whether further action one of our strategic topics. The Sustainable Investing Working Group ensures that is necessary, including escalation to senior management. 2. Our sustainability governance structure high-quality and, sustainable investing standards are Additionally, the group may convene or communicate being applied across the firm and allows especially for on an ad hoc basis topics that require a collaborative AllianzGI has clearly established lines of responsibility cross-asset class topics to be considered. It is a forum sounding board for establishing a need for action. for sustainability. to share best practices and discuss, agree and execute The International Management Group acts as a sounding Sustainability governance structure board and communication platform for strategy and decisions ifrm-wide. Executive Committee Investment Executive Committee Sustainable Investing Global Proxy Reputational Risk Working Group Voting Committee Working Group International Management Group 6 AllianzGI TCFD Report 2021

03 Strategy AllianzGI has been at the forefront of responsible investing since the launch of our ifrst sustainable investing portfolio in 1999. Climate change is arguably the greatest challenge of our time for all our stakeholders and, given the volume of assets we manage, we can be of some inlfuence in driving positive change. As an asset manager, sustainability considerations in general, and climate change considerations in particular, are an integral part of our investment strategy, investment processes and investment product development as well as business operations. Acknowledging that there is an urgent action required to accelerate the transition towards global net zero emissions, AllianzGI was proud to join and become a committed member of the Net Zero Asset Managers initiative in 2021. We are supporting the goal of net-zero GHG emissions by 2050 in line with efforts to limit global warming to 1.5°C. We also encourage investee companies to integrate climate change considerations in their strategic decision- making process. AllianzGI TCFD Report 2021 7

03.1 Strategy 1. Climate-related risks and opportunities the Term Investments Products Corporate organisation has identiifed over the short, medium, and long term Short Transition risk: policy and reputational risks Transition risk: shift in Reputational risk In the next two years, increased policy ambition can be expected market demand If the public and relevant We see a diverse set of both transition and physical to reach the Paris Agreement goals1, which is likely to translate into With increased attention stakeholders see that insuiffcient climate risks and opportunities that may pose a stricter regulatory and policy action and thus potentially increase on climate-related matters from action is being taken to address company compliance costs or exert reputational pressure on both retail and institutional material climate-related issues, it signiifcant risk or opportunity to us in the short, medium, company and sector climate profiles. A rise in EU Emissions clients, addressing climate topics might affect the intangible brand and long term. Certificate prices is an example of such risk. insuiffciently in our investment value and capital availability on our With more public attention on climate change, some business process and products might operating entity, as well as having 2 put them at risk of falling out a knock-on group-wide effect as models will not meet the objectives of a Paris-Aligned Climate-related risks world, of demand. AllianzGI is part of Allianz SE. 3 which may transmit by losing a “social licence to operate” or Climate-related risks are developments that may reputational risk eg, via movements like “Extinction Rebellion”. pose a significant risk to the value of assets we Both risks can affect the value of investments due to decreased manage, the standing of investment products we growth expectations or increased cost expectations. sell, and our corporate activity. Medium Transition risk: market, technology and physical Transition risk: policy climate risk (acute) If there is an increase in regulatory In the short-term we see the policies and reputational risks Larger economic trends like energy transition and further policy pressure on fossil fuel energy, action are likely to exacerbate pressure in the next two to 10 years on this may transmit itself through of our investee companies as the leading climate-related fossil fuel producers. Higher costs may occur in areas increasingly additional operational costs on risks that may affect investments. In the mid term, market exposed to physical climate risks. Additionally, policy and customer using such energy sources versus and technology risks of climate transition may develop preference changes are likely to amplify the shift in market demand non-fossil based fuels. In addition, towards companies with more sustainable services and/or products. more required disclosure on climate more substantially, and acute physical risk might emerge Some of the costliest losses from extreme weather events and change by regulators would more frequently. With a long-term perspective, we are of natural disasters have occurred in recent years. Such acute physical increase the compliance costs. the view that chronic physical climate risks can become climate risks are likely to increase insurance premiums to entities in the areas affected. Thus, investments exposed to areas prone more substantial. to increasing acute physical risks may either experience higher insurance costs or increased expenditure to adapt to such events. Long Physical climate risk (chronic) Physical climate risk (chronic) In areas exposed to high physical risks, due to more frequent The locked-in emissions in the extreme weather events anticipated in the next 10 years, there may atmosphere are predicted to be an increase in disruption to business services leading to a higher lead to more frequent and severe risk of economic distress and future losses. extreme weather events,5 which The locked-in emissions in the atmosphere are predicted to lead to can put our business operations in more frequent and severe extreme weather events,4 which could affected areas at risk of disruption. destroy assets or disrupt business services leading to a potential loss of investment. The same causes can lead to economic distress in countries exposed to physical climate risks, which may result in re-pricing of investments linked to sovereigns. 1. “Holding the increase in the global average temperature to well below 2°C above pre-industrial levels and pursuing efforts to limit the temperature increase to 1.5°C above pre-industrial levels, recognizing that this would significantly reduce the risks and impacts of climate change”. Source: Paris Agreement 2. Paris-Aligned refers to a world meeting the objectives set out by the Paris Agreement (UNFCCC, 2015) 3. Warhurst, A. 2001 Corporate citizenship and corporate social investment: Drivers of tri-sector partnerships. J. Corporate Citizenship 1, 57–73 4. Source: https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf 5. Source: https://www.ipcc.ch/site/assets/uploads/sites/2/2019/06/SR15_Full_Report_High_Res.pdf 8 AllianzGI TCFD Report 2021

03.1 Strategy Climate-related opportunities Term Investments Products Corporate Climate-related opportunities are developments that may pose an upside potential to the value of assets Short Resource eiffciency Climate transition: shift in Climate transition we manage, enhance the market positioning of our Opportunities for businesses and economies that enable and beneift from market demand Reducing emissions from the climate transition towards cleaner energy generation, eiffcient energy With increased attention on our business operations investment products, and optimise our corporate activity. storage and sustainable energy consumption. This not only would decrease climate-related matters from by improving energy costs per unit produced but the freed-up capacity can be leveraged for both retail and institutional eiffciency can also lead In the short term we see opportunities that enable sustainable business growth, thus beneiftting the investment value. clients, amending existing to increased savings on and beneift from the climate transition as the leading Energy transition investment processes and operational expenses. With an increasing policy risk on energy transition, renewable energy is products to strengthen climate-related opportunities that may affect likely to beneift if additional costs are imposed on emissions-heavy energy how they address climate investments. In the mid and long term, the climate - and fuel sources. Thus, a climate opportunity emerges within businesses topics and innovating new that either produce renewable energy, as the demand for it will increase, investment products targeting related investment opportunities are arising from or businesses using renewable energy will increase, because peers using climate change can lead to an competitive positioning and climate innovation. energy affected by policy impacts would experience relatively higher costs. increase in market share and business growth. In summary, our key assumptions across the three climate Medium The climate transition and emergence of more prevalent physical climate risks risk factors are as follows. We consider the transition is likely to bring a transformation unlocking new sources of revenue, change risk of corporates moving into a low-carbon emitting in competitive positioning of businesses and economies, emerging leaders in economy to be broad and to go beyond energy supply climate innovation, and signiifcant reputation advantages, all of which may result in opportunities in investments. Brand reputation transition only. Transition will concern energy-using Companies already aligned with Paris Agreement targets may beneift from Improving reputation processes and products, agriculture and forestry, waste a “ifrst-mover” advantage in reputation and attracting new ifnancing at as a company actively management etc. We are in this transition already and potentially lower rates. Likewise, companies showing credible transition efforts tackling climate change will likely beneift from cheaper ifnancing e.g., bonds linked to climate key and responsibly it is far from over; business disruption looms. According performance indices (KPIs). To achieve that new technological solutions will participating in climate to the third volume of assessment report published be required, and thus companies at the innovative edge may receive positive transition can stand to by the Intergovernmental Panel on Climate Change tailwinds, too. An example of a policy framework that will amplify these beneift the intangible opportunities is the EU Taxonomy. value of our brand 1 globally and across (IPCC), the window to prevent global temperatures from communities. rising by more than 1.5°C above pre-industrial averages Long Furthermore, the change in consumer preferences globally, and the increased is rapidly closing. In our view it is also not clear whether, attention on climate change mitigation and adaptation, sustainable use of water, circular economy and waste management, and biodiversity are all despite large scale efforts following COP 21, we will themes likely to play a role in shaping the investment landscape. avoid the 2°C warming which is the level that must be avoided according to scientists. It is likely that both mitigation and adaptation will have major ramiifcations for investors. 1. https://www.ipcc.ch/report/ar6/wg2/ AllianzGI TCFD Report 2021 9

03.2 Strategy 2. Impact of climate-related risks and opportunities Infrastructure equity – a 28% GHG reduction, scopes 1 on the organisation’s businesses, strategy, and and 2, by the end of 2025 (baseline year: 2020). financial planning Infrastructure debt – our target is to grow the share of A net-zero asset manager low-emitting and EU taxonomy-eligible assets. AllianzGI commits to supporting the goal of net-zero GHG emissions by 2050, in line with global efforts to limit As part of our commitment to a sustainable future, we warming to 1.5°C (“net zero emissions by 2050 or sooner”). manage the environmental impacts of our operations This is in line with the Paris Agreement which sets out a and aim to be a role model in delivering our own targets global framework to avoid dangerous climate change by on climate change and the environment. Our efforts limiting global warming to well below 2°C and pursuing contribute to Allianz Group goals, including working efforts to limit it to 1.5°C. It also aims to strengthen countries’ towards sourcing 100% renewable electricity for our ₂ ability to deal with the impacts of climate change and operations by 2023 and reducing CO emissions by 38% support them in their efforts. per employee by 2025 against a 2019 baseline. For more After joining the Net Zero Asset Managers The NZAM initiative is a step change. It requires those information, see section 5 Metrics and targets. initiative in 2021, we embarked on our net-zero actions, such as engagement, to be in line with the A targeted exclusion policy journey. One of our priorities was to partner with net-zero goal and anticipates increasing the scope of We acknowledge that thermal coal is the biggest Allianz, our largest client, to support its net-zero assets being managed in line with the net-zero goal until contributor to climate change. AllianzGI has a ifrm-wide ambitions across both public and private markets 1 100% is reached. AllianzGI was proud to join and become exclusion policy that includes a dedicated thermal coal investments. This is just a ifrst step. I’m excited a committed member of the NZAM initiative in 2021. policy. For more information, see section 4.2. about the next steps, which will involve bringing After becoming a NZAM signatory in 2021, we submitted Steps taken to address the impact of climate-related third-party client assets into scope. We will continue ifrst interim targets at the beginning of 2022. As the ifrst risks and opportunities to engage actively with our institutional clients and step, these targets cover listed equity, corporate debt, A key pillar in our philosophy surrounding climate distributors on integrating net-zero objectives in infrastructure equity, and infrastructure debt and relfect investments today is that the public corporate disclosures their investments and into our mutual funds. the targets set in 2021 by Allianz Group for its proprietary on climate are not yet highly developed nor in-depth Deborah Zurkow assets based on its commitment as a member of the enough to be suiffcient for simple rules-based strategies. UN-convened Net-Zero Asset Owner Alliance. For this reason, we believe that there exists market Global Head of Investments The assets in-scope for these targets represent 12% ineiffciencies on climate risks and opportunities, for which of AllianzGI’s overall assets under management. The active research and corporate engagement are necessary. submitted targets include: Our dedicated and experienced Sustainability Research Listed equity and corporate bonds – a 25% GHG team analyzes the material implications of climate change reduction, scopes 1 and 2, by the end of 2024 (baseline to the economy, sectors' drivers and business models of year: 2019). individual companies. We research the following: 1.This Policy is applicable to mutual funds for which Allianz Global Investors is acting as management company. For institutional funds and mandates, application of the Policy including its implementation date is subject to the consent of the respective clients. For more information on the Net-Zero Asset Owner Alliance commitment of Allianz Group, please see the Allianz Group Sustainability Report 10 AllianzGI TCFD Report 2021

03.2 Strategy – How and where global warming as well as Company increasing extreme weather events stress the research food system and the potential economic and total emissions for this activity are social repercussions across the value chain. disclosed and integrated in the emissions reduction targets. In terms – What are the key measures and challenges of of the concrete measures to deliver the automotive sector to address its scope 3 Differentiating on climate targets, we verify the emissions (use of products). insights investment budget allocated to – By reviewing an energy production or distribution Sector energy eiffciency in the operations player, how its methane performance and related research including the value chain especially emissions reduction targets aligned with the Thematic the transport of the tyres. Another latest methane emissions pathway set by the research strong action lever on emissions IEA and whether investment plans in methane within scope 3 is the life cycle leakage prevention systems are credible. management of the tyres up to the end of life with recyclability AllianzGI Sustainability Research team conducts its improvement. The risk/opportunity proprietary research from 3 angles – themes, sectors assessment looks at the strategy to and companies. These three angles are closely Research examples stakeholders. A full selection of our adapt the product features to electric linked, and an iterative process ensures that analysis Thematic research: One example is thematic research is available on vehicles. Finally the actual GHG in one area informs the others, evolving the breadth our introductory paper on climate our website. performance is compared to peers and depth of our understanding of companies’ change, published in 2021, in which for the emission intensity reduction sustainability proifles – and how to measure and we discuss the different elements Sector research: When assessing pace. This assessment lfows into engage them. of the notion of net zero that the impact of carbon emissions the ifnal sustainability rating of the The derived impactful investment insights are are complex and, in some cases, at a global level, we identiifed oil company and can trigger our decision articulated in views, which are shared with the misunderstood. Its purpose was to and gas as one of the most exposed to initiate an engagement. investment platform via a collaboration platform, explore in detail the various terms sectors. As a result, we analysed AllianzGI offers climate-thematic and as well as through discussions and presentations, and deifnitions used by stakeholders and deifned criteria which can be impact-focused funds such as climate empowering the investment professionals to inte- in relation to climate strategies, how used at company level to assess transition equity, smart energy grate these in the respective investment decisions. best to assess alignment with the energy transition strategy (e.g., equity, green bonds, as well as private AllianzGI Sustainability Research ifndings are also Paris Agreement and how to identify whether the company has a market investments in renewable shared externally over thematic papers, either areas on which to develop analysis decarbonisation policy). energy and blended ifnance solutions about speciifc climate issues within our sustainability and engagement. In 2021, we started Company research: For a company that tackle climate issues in emerging thematic pillar dedicated to Climate or about topics to produce research papers on in the tyre industry, our analysis markets. As these examples show, with strong interplay across one or more of the other speciifc issues to stimulate discussion, of climate related factors scrutinizes we integrate climate risk and AllianzGI thematic pillars: Planetary Boundaries and form our view and articulate it to our whether scope 3 emissions, opportunities into public and private Inclusive Capitalism. portfolio entities, clients and other representing more than 95% of markets offerings. AllianzGI TCFD Report 2021 11

03.2 Strategy Climate Transition To do this, new infrastructure, and disruptive new solutions This capability being an impact strategy, the investment Our Climate Transition capabilities are managed under across a multitude of industries and sectors are required. team does not exclude from the investment universe the a dynamic low-carbon investment strategy which aims This market opportunity is expected to reach issuers with the highest potential of improvement, the over time to be in line with the objective of limiting global 2 translating into a wide range highest potential impact. This strong positioning is in USD 15 trillion by 2050, warming to 1.5°C and 2°C. This approach involves of robust investment opportunities with the potential line with the ambitious transition objectives of the Paris sustainable development, likely to impact the business to provide investors with sustainable long-term earnings Agreement for climate. model and the growth and risk proifle of companies across and a cleaner and greener portfolio. Allianz Smart The most important step of climate change integration various business sectors, which also create potential medium Energy invests in those key enablers contributing to the in portfolio construction begins with the analysis of the and long-term investment opportunities. Our approach energy transition process. We invest across three distinct bond structure to determine whether it is in line with the aims to limit exposure to carbon risk by ensuring the topics and an array of underlying areas: Green Bond Principles or not. reduction of its impact on climate over the recommended 1. Cleaner energy generation – e.g. renewables and investment horizon, without applying any sector exclusions Eligibility criteria under which bonds are considered as targeting industries generating high GHG emissions. back-up power “green bonds” include: The stock-picking strategy targets two types of companies: 2. Eiffcient energy storage – e.g., lithium-ion chemistry, – A formal statement in the use of proceeds section hydrogen technology and energy storage systems of the bond prospectus stating that the proceeds wil l 1. Companies demonstrating dynamic progress in terms of 3. Sustainable energy consumption – e.g., electric be used to finance “green”/climate projects. climate impact performance by aligning their strategies transportation, eiffcient buildings, smart grid – Internal process by the issuer to identify qualifying with energy transition objectives and therefore reducing Green Bond projects based on sound methodology and clear criteria. risks incurred by implementing this type of transition. Our commitment is to contribute positively to the – Management of the proceeds to make sure that they 2. Companies involved in businesses, products or services climate transition. Our investments in green bonds will be allocated to the identified projects and not to which reduce GHG emissions in the real economy and aims to mobilise capital to ifnance the energy and other general expenses/investments. which, therefore, beneift from opportunities provided climate transition. By using the Green Bond market – Reporting, at least annually, of the status of the use by energy transition. segment, the strategy favours the reallocation of of proceeds, the status of projects and the actual Smart Energy investments through a lower carbon-intensive economy environmental impact. Smart Energy looks for companies around the globe which is an important challenge in the ifght against The evaluation is followed by the analysis of the projects that are enablers and beneifciaries of the energy climate change. ifnanced with the green bond issuance proceeds. AllianzGI transition process. The management team is conscious that the investments has been a partner of the Climate Bond Initiative since 2015. Energy transition is already in motion, and it aims to needed to cope with the objectives of a maximum 1.5°C This allows the fund to keep in its investment universe address our energy challenges by transforming the and 2°C increase compared to pre-industrial times are issuers with an ESG proifle which may not be best-in- global energy sector from fossil-based to carbon- huge. They aim to actively contribute to this capital class but which have a strong improvement potential 1 neutral by 2050. market mobilisation with this strategy. and are willing to leverage on it. 1.https://www.irena.org/-/media/Files/IRENA/Agency/ Publication/2019/Apr/IRENA_Global_Energy_Transformation_2019.pdf 2.https://www.irena.org/-/media/Files/IRENA/Agency/Publication/2019/Apr/IRENA_Global_ Energy_Transformation_2019.pdf 12 AllianzGI TCFD Report 2021

03.2 Strategy Renewable energy Emerging Markets Climate Action Fund (EMCAF) Allianz Capital Partners, our private equity business, has a In November 2021, the European Investment Bank (EIB) and dedicated renewable energy strategy which it manages AllianzGI launched the Emerging Market Climate Action for both Allianz and third party clients. The team invests in investment approach in a public-private partnership, with the energy infrastructure sector with a focus on renewable the governments of Germany and Luxembourg, the Nordic energy assets like wind and photovoltaic plants, and as a Development Fund, Allianz, Folksam and EIB as anchor result contributes to the generation of renewable energy and investors. EMCAF will invest in climate-focused investment avoidance of carbon emissions, both of which are actively funds and projects active in emerging markets and developing measured and monitored. The impact on carbon emissions countries. Its focus will be on climate mitigation, climate reduction of the acquired assets is compared to the regular adaptation, and access to electricity. This approach aspires country speciifc energy mixes, including traditional energy to become a European lfagship impact investing initiative, sectors. In the calculation the annual production per asset is mobilising substantial amounts of private capital to get climate used to calculate the actual asset speciifc carbon emissions action projects off the ground in Africa, Asia, Latin America and and to compare these emissions to the theoretical emissions the Middle East. EMCAF are expected to support a signiifcant assuming the amount of energy would have been produced amount of new clean energy capacity globally. in the country speciifc energy mix. EMCAF targets specialised investments to support projects For the European geographically focused capabilities, the like onshore windfarms and solar photovoltaic plants, or small- information on emissions per MWh for each country is based on and medium-sized hydropower plants. It could also support the “total supplier mix”, which is taken from the study European energy eiffciency projects in housing or industry, or projects Residual Mixes. Results of the calculation of Residual Mixes for bringing environmental or resource eiffciency beneifts. To help the calendar year 2020 were published by the Association of emerging and developing countries to adapt to the impacts of Issuing Bodies on 31 May 2021 (Version 1.0). climate change, the approach could also ifnance projects that For the US geographically focused capabilities, equivalent support cities and their public transport. numbers were taken from the report “U.S. Energy-Related Managed Co-Lending Portfolio Program (MCPP) One Planet Carbon Dioxide Emissions, 2020” posted by the U.S Energy At the UN Climate Conference in Glasgow in November 2021, Information Administration in December 2021. As of AllianzGI, Allianz SE and International Finance Corporation today, our carbon and ESG reporting fulifl all regulatory (IFC), a member of the World Bank Group, announced they requirements stemming from the latest EU Taxonomy will provide USD 3 billion to private enterprises in developing regulations and are aligned with the French Energy economies through a Managed Co-Lending Portfolio Program Transition Law in its article 173, as well as the regulations (MCPP). The investors’ contributions will be combined with arising from our compliance with minimum social IFC’s own funds, to scale up climate-responsible ifnancing in safeguards. The list of these regulations includes, but emerging markets which is aligned with the Paris agreement. is not limited to, OECD guidelines for multinationa l MCPP One Planet, is the world’s ifrst cross-sectoral portfolio of enterprises, UN guiding Principles on Business and Human emerging-market loans aligned with the Paris Agreement, and Rights and the ILO declaration on fundamental principles will enable large institutional investors to increase the share of and rights at work. their portfolios aimed at climate-resilient development. AllianzGI TCFD Report 2021 13

03.2 Strategy Our response – active industry and policy engagement was building a sustainable future, and this covered mobilise and present potential climate investments and As a part of our support for TCFD, we recognise the ESG issues such as climate change, as well as the latest ifnancing. During this two-day in-person and digital necessity for a broader change and alignment in the updates in responsible investment practices. More hybrid Summit, Matt Christensen, our Global Head investment industry around climate risks and opportunities. information including agenda and recorded sessions of Sustainable and Impact Investing, gave a keynote We believe that this can bring several long-term beneifts can be found here. speech and joined a panel as part of the closing session to our investors: more attention and efforts from The World Climate Summit – the investment equivalent on 7 November discussing: The Climate Decade – investees due to more aligned climate expectations, of COP 2021 (7-8 November 2021): the summit was a Collaborating to Overcome Challenges and Maximise more precise measurement through clear requirements critical platform for responding to the growing climate Opportunities for Transformational Action by 2030. on climate scenarios that meet investor needs, and more challenge, promoting relevant solutions, innovations and reifned climate investment frameworks. best practice networks. It functioned as a cross-sectoral Industry consultations collaboration and solutions-focused platform for Case study 2 We responded to consultations from local and regional government and project development stakeholders to authorities including the European Commission, the US SEC consultation on climate Securities and Exchange Commission (SEC), the Financial change disclosures Conduct Authority in the UK, the Monetary Authority of Case study 1 Singapore and the Securities and Futures Commission of Hong Kong (SFC) on various sustainability topics In June 2021, AllianzGI provided feedback to the US Securities including climate. Our responses set out our views and SFC consultation and Exchange Commission’s consultation on climate change recommendations on these topics. on climate risk disclosures. Our main messages were: – A need for global alignment on ESG and climate disclosure. Sponsoring industry dialogue – Both ifnancial materiality and environmental and social AllianzGI continues to sponsor major events In October 2020, the Hong Kong SFC published a consultation materiality should be taken into consideration. We also demonstrating our commitment to tackling climate paper on the Management and Disclosure of Climate-related emphasised that the results of broadly established pioneering change in the hope of working towards a greener Risks by Fund Managers. In the consultation paper, the SFC work, experience and accumulated expertise of organisations has proposed to amend the Fund Manager Code of Conduct already dedicated to climate disclosure, especially the TCFD future, and accelerating our sustainable investment (FMCC) to introduce requirements for fund managers to framework, become cornerstones of the global standards and drive. In 2021, we sponsored, among others, the take climate-related risks into consideration in their investment national requirements for climate and potentially also other following events: and risk management processes as well as to make appropriate ESG-related disclosures. disclosures to meet investors’ growing demand for climate risk The PRI Digital Conference (18-21 October 2021): information and to combat “greenwashing”. In our consultation Read more about the AllianzGI response to the SEC AllianzGI has a long association with United Nations feedback we provided our views and recommendations Additionally, we welcome the SEC’s proposal for climate on multiple topics, for instance referencing the TCFD’s disclosures, announced in March 2021. In our view it will Principles for Responsible Investment (UN PRI). We were recommendations for the SFC’s proposed requirements, enable more robust, reliable and comparable information on one of the ifrst 50 asset managers globally to become a scope of requirements for climate related risks, and baseline climate-related risks facing public companies. We will provide signatory to the PRI in 2007. The PRI Digital Conference requirements and standards. our feedback and we encourage companies, investors and brought investors, policymakers and other sustainable Read more about the AllianzGI response to Hong Kong SFC other stakeholders to take the opportunity to provide their ifnance stakeholders together from around the world feedback through this consultation and help shape the for an online exchange of views and ideas. The theme disclosure requirements. 14 AllianzGI TCFD Report 2021

03.2 Strategy Climate-related initiatives AllianzGI actively participates in various international initiatives focusing on climate change from investor’s perspective. Initiative Allianz Global Investors‘ position Description Joined the initiative Asian Investor Group Member AIGCC is an initiative to create awareness among Asia’s asset owners and financial institutions about the risks and opportunities 2018 on Climate Change associated with climate change and low carbon investing. 2021 Member Engagement The work this group undertakes on engagement is complementary and in parallel with company engagement as part of Climate and Policy Working Group Action 100+. Given the interconnected nature of company engagement and government policy in the region, combining the focus of this working group will initially enable investors to understand how their increasingly important role in policy advocacy can also help drive more ambitious corporate climate action. Member Paris Aligned The group focuses on developing investor solutions for facilitating the transition to a net-zero emissions economy in Asia, and to 2021 Investment Working Group track global progress. It identifies and collates what institutional-grade low carbon opportunities are available in the region and how they can be scaled up based on research. Carbon Disclosure Project Investor Member International non-proift organization that promotes carbon reporting by requesting information from leading companies about their 2015 GHG emissions and other environmental impacts. Climate Action 100+ Participant The Climate Action 100+ is an investor-led initiative to ensure the world's largest corporate greenhouse gas emitters take necessary 2017 action on climate change. Climate Bonds Initiative Partner International, investor-focused not-for-proift. It's the only organisation in the world working solely on mobilizing the $100 trillion bond 2015 market for climate change solutions. Climate Finance Founding Member CFLI aims to unlock climate ifnance in emerging markets, thereby mobilizing private capital in order to help ifnance the transition 2019 Leadership Initiative towards a more sustainable tomorrow. Green Bond Principles Member The GBP are intended for broad use by the market: they provide issuers guidance on the key components involved in launching a credible 2015 Green Bond; they aid investors by ensuring availability of information necessary to evaluate the environmental impact of their Green Bond investments; and they assist underwriters by moving the market towards standard disclosures which will facilitate transactions. Member Advisory Counci l The role of the Advisory Council is to advise the Executive Committee, to increase its market awareness and outreach, and to enable 2019 Green Bonds and Social Bonds further engagement with speciifc membership categories and observers. Initiative Climat Member The iCI represents a collective commitment to understand and reduce carbon emissions of private-equity based companies and secure 2021 International sustainable investment performance. Institutional Investors Member IIGCC provides investors with a collaborative platform to encourage public policies, investment practices, and corporate behaviour 2016 Group on Climate Change that address long-term risks and opportunities associated with climate change. Member Climate Solutions A dedicated working group to develop best practice and support members to increase investment in climate solutions. This group 2021 Working Group oversees analytical work on defining pathways and setting targets for investment in climate solutions, support members to set targets and make commitments in relation to investment in climate solutions, and more broadly share best practice and build capability for investing in climate solutions. AllianzGI TCFD Report 2021 15

03.2 Strategy Initiative Allianz Global Investors‘ position Description Joined the initiative Institutional Investors Member Net Zero Technical The group contributes to the Paris Aligned Investor initiative (PAII) by addressing analytical gaps where further development of 2021 Group on Climate Change Working Group methodologies and approaches is required to support implementation of the Framework. Topics include development of target setting methodologies, use of offsetting, Scope 3 emissions inclusion and measurement. The Net Zero technical working group takes forward development and oversight of this work. Member Net Zero This working group aims to provide a forum to help investors view how best to operationalize “net zero stewardship”, and develop 2021 Stewardship Working Group key tools to enable progress and work with proxy advisors to ensure they are ready to support investors. Net Zero Asset Signatory The Net Zero Asset Managers initiative is an international group of asset managers committed to supporting the goal of net zero 2021 Managers initiative greenhouse gas emissions by 2050 or sooner, in line with global efforts to limit warming to 1.5 degrees Celsius. One Planet Member OPAM was launched to support the members of the Ones Planet Sovereign Wealth Fund (OPSWF) in their implementation of the 2021 Asset Manager OPSWF Framework. The goal is to acclerate the understanding and integration of the implications of climate-related risks and opportunities within long-term investment portfolios through sharing of investment practices and expertise. Member Steering Committee The steering committee brings together technical leadership and commitment by its participants aiming to further support the 2021 implementation of the OPSWF framework. Thereby this group contributes to actively shaping the future of the initiative. Task Force on Climate-Related Supporter The TCFD seeks to develop recommendations for voluntary climate-related ifnancial disclosures that are consistent, comparable, 2019 Financial Disclosures reliable, clear, and eiffcient, and provide decision-useful information to lenders, insurers, and investors. Complete overview of our sustainability initiative and memberships can be found here Case study 3 Case study 4 Climate Action 100+ One Planet Asset Manager (OPAM) initiative We are a member of Climate Action 100+. In line with our thematic focus on climate, we supported OPAM initiative was first launched to support the members of One Planet Sovereign Wealth a collaborative engagement letter that asked a US company to add a discussion item to its Annual Funds in their implementation of the One Planet Sovereign Wealth (OPSWF) framework. The General Meeting (AGM) agenda about its climate change commitments, as well as adopting a goal is to accelerate the understanding and integration of the implications of climate-related routine advisory vote on its climate strategy. Given our limited direct exposure, adding our support risks and opportunities within long-term investment portfolios through sharing of investment to a collective engagement was likely to have a greater impact. With the addition of discussion practices and expertise. The OPSWF network comprises 43 of the world’s largest institutional items to the agenda – as well as a formal response from the company – it was clear that climate investors with more than USD 36 trillion in AuM and ownership. AllianzGI was the first German had become a board-level issue and that continued engagement would be beneifcial. asset manager to join the initiative. We are committed to actively collaborating within the OPSWF members and to engaging with other key actors – including standard setters, regulators and the broader industry – to further the framework’s objectives. 16 AllianzGI TCFD Report 2021

04 Risk management 1. Organisation’s processes for identifying and – Reach global net zero emissions by 2050, or soon after moderate and high climate change scenario) and three assessing climate related risks – Provide differentiated pathway information for regions time horizons (2020, 2030 and 2050), which causes the AllianzGI believes that it is crucial to be able to identify and and sectors which may require net zero emissions score attributed to each of these risks to vary. assess sustainability risks as they can impact the investment earlier or later, consistent with the global goal Depending on the company’s activity, these risks are performance of portfolios negatively. More speciifcally, – Have a global peak emissions year of the current year considered more or less material, and this is reflected the risks that can arise from climate change (physical and or later in a sensitivity adjusted composite physical risk score. transition risks) may result in signiifcant economic and – Ideally be (or linked to) a multi-sector model, taking This dataset provides us some valuable information ifnancial losses and even impact ifnancial stability. account of all emissions sources at company level that we then aggregate at portfolio Currently, a growing number of methodologies aiming – Rely on limited volume of negative emission s level thanks to an internal tool we developed. Portfolio at estimating climate-related risks are being developed technologies (NETs) to 2050 managers can thus evaluate whether their portfolios and can sometimes lead to similar outputs despite having have high exposures to physical risks and understand differing inputs and methodologies, such as the global At AllianzGI, we are developing a tool to measure which companies are most at risk. physical and transition risks at both company and We are also assessing transition risks thanks to scenarios warming potential metrics. To obtain more relevant and portfolio level. provided by an external data provider. For each company, comparable results, we believe that a common set of In the listed strategies, we assess physical risks using a a trajectory is built and combines historical data and standards on climate scenario assumptions is needed third party data provider. For each company, seven c-li projected emissions on Scopes 1 and 2 that go u p for a globally aligned climate risk assessment, such as: mate hazards are considered: water stress, heatwave, to 2025. Along with this trajectory, 2°C and wel l- – Be associated with limiting warming to 1.5°C above cold wave, hurricane, flood, sea level rise and wildfire. below 2°C pathways are given, allowing us to see if a pre-industrial levels with at least 50% probability These risks are assessed across three scenarios based company’s expected future emissions are in line with (or at least well below 2°C with >66% probability) on IPCC Representative Concentration Pathway (low, a low carbon economy. AllianzGI TCFD Report 2021 17

04.1 Risk management Our tool aggregates these data at portfolio level, so that and trends; GHG emission reduction targets with all of the funds managed by AllianzGI, with an annual portfolio managers can assess the alignment of their validation by science-based sources; the company’s review of the methodology. portfolio with a 2°C or well below 2°C pathway, and lfag net zero carbon timeline plans; use of carbon offsets The stress test is based on the three Bank of England the most misaligned companies they are invested in. to reduce net footprint; and the company’s approach climate scenarios published in 2019 (Bank of England In private markets, these risks are considered during the to climate transition risk and physical climate risk. General Insurance Stress Test 2019). Two of the origination and due diligence process. Depending on The private markets teams, in both direct and indirect scenarios assume that the Paris Agreement’s targets the individual investment strategy, the investment teams strategies, have a strong program of engagement to are achieved on different trajectories, while the last review specialist reports commissioned by independent encourage existing investments to move towards net-zero scenario assumes that the targets are not met, resulting advisors, conduct in-depth discussions with the pathways, and in many case new investments must have in a major impact on global climate. a transition plan in place. management and/or existing equity owners, and seek Climate scenario analysis and stress-testing The results obtained provided some valuable insights as advice from specialist Sustainability research colleagues Assessing the risk and opportunities related to climate they allowed us to see the potential negative ifnancial within AllianzGI or Allianz SE. The due diligence process change through scenario analysis is a crucial priority impacts of both physical and transition risks on assets is used to identify relevant climate risks for each investment. across the financial services industry. AllianzGI closely from at-risk sectors, such as fuel extraction, power A bespoke analysis is subsequently performed if monitors regulatory developments and participates in generation, and agriculture, but also the opportunities necessary. This can include both qualitative analysis (eg, various industry working groups related to this topics. (eg, electric vehicles, renewables). Q&A with the management or independent advisers) or As mentioned above, we are also now providing a quantitative analysis (eg, building a cash-lfow operating In 2021, we have been developing tools aiming at climate scenario assessment at portfolio and company model for a single company and sensitising the inputs). integrating climate change in our analysis. We are now level to some of our portfolio managers through an The teams will review the investment’s carbon footprint performing and monitoring a quarterly test on most internal tool, enabling them to compare the projected trajectory of GHG emissions with a 2°C and well below Name Key assumptions Temperature rise Year of impact 2°C aligned trajectory of their portfolios and to view Sudden disorderly transition (Minsky moment) that follows the detail by company. Scenario A from rapid global action and policies Below 2° C by 2100 2022 These newly created tools allow us to assess the potential Long-term orderly transition that is broadly in line with the climate risks of our investees and portfolio profiles Scenario B Paris Agreement Well below 2°C by 2100 2050 surrounding climate change mitigation and adaptation, but we are always working at developing and creating Scenario C No transition and a continuation of current policy trends Exceeding 4°C by 2100 2100 new ways to further integrate an assessment of climate risks to our management. 18 AllianzGI TCFD Report 2021

04.2 Risk management 2. Organisation’s processes for managing climate- ongoing asset management activities. They are also structuring phases, often through project- and fund- related risks often lfagged through sustainability risks guidelines speciifc due diligence questionnaires. Additionally, When it comes to climate data, we rely signiifcantly on (based on international best-practice standards) or using many of AllianzGI’s private market assets are subject the disclosure provided by companies. Therefore, it is one minimum exclusion lists. When a sustainability risk is to the Allianz ESG Integration Framework, which sets of the key topics for us when engaging with companies. Over detected during the origination process, the investment out criteria to be considered and met when investing time, we expect the quality of the disclosure to improve, team can use several methods to mitigate and manage in particular sensitive business areas. allowing us to report in a more meaningful way. these identiifed risks, whether through commercial terms Sustainability risks and principal adverse impacts are As part of our engagement with companies on climate or documenting speciifc conditions, or by rejecting the monitored and assessed using our internal sustainability issues, we are encouraging them to report on TCFD transaction if the sustainability risk are deemed to risk assessment tool called ESG Hub. It is accessible and commit to Science Based Targets (SBT) to lead to be insuiffciently mitigated. Investments are actively to all of our portfolio managers, and enables them to better quality of disclosures provided to our investors, monitored through the asset management process, ifnd reports on the sustainability risk proifle of each of helping them to monitor their progress and meet their responding to materialising sustainability risks quickly their portfolios. These reports include ESG measures as climate goals with more accuracy. We also support and decisively through engagement with the management well as principal adverse impact indicators, giving the and participate in the Climate 100+ initiative. or sponsors of the companies in which AllianzGI invests portfolio managers transparency by: on behalf of our clients. Beyond engagement, climate-related risks are considered Analysis and consideration in the investment process – Providing a view of the overall portfolio’s through AllianzGI’s sustainability risk management of principal adverse impacts sustainability risk profile strategy, which was launched in 2021 and addresses Principal Adverse Impacts (PAI), which have also been – Highlighting potential E, S, G pillar or sector two dimensions: introduced by the SFDR are deifned as negative impacts concentration risks Analysis and management of sustainability risks on environmental, social and employee matters or – Outlining the individual holdings from which A sustainability risk is deifned by the EU regulation on human rights, and/or impacts which may be linked to tail risks derive 1 governance issues. sustainability-related disclosures in the ifnancial services The data in the ESG Hub is updated on a monthly sector (SFDR) as “environmental, social or governance For listed equities and corporate ifxed income assets, a basis and past reports remain accessible, allowing event or condition that, if it occurs, could cause an actual regular portfolio screening of principal adverse impact the portfolio managers to track the evolution of the or a potential material negative impact on the value of is performed along selected key performance indicators, sustainability risk profile of their portfolios and single the investment”. including climate change-relevant indicators, such as indicators within them. For publicly listed asset classes, external sustainability carbon emissions (absolute and relative), whether the The following sample images depict dashboards which research data and/or internal research and analysis are company has committed to any decarbonisation targets, are available for portfolio managers in the ESG Hub. used. These risks are then considered by the investment and exposure to sectors that are affecting climate change manager in the investment process. more than other sectors. For private market assets classes, sustainability risks are For private markets investments, principal adverse considered throughout both the investment process and impacts are considered during the origination and 1.Sustainable Finance Disclosure Regulation (SFDR) (Regulation (EU) 2019/2088) AllianzGI TCFD Report 2021 19

04.2 Risk management The below sample images depict dashboards which are available for portfolio managers in the ESG Hub. – The diagrams and statements below relfect the example inputs for shaping the portfolios. At any given time, other criteria may affect the investment strategy. – The diagrams and statements below are provided for illustrative purposes only. ESG dashboard overview ESG risk dashboard Portfolio snapshot Overall portfolio ESG score ESG tail risk overview (Score <=3) Portfolio E,S &G pillar distribution Absolute in % of PF value 1 Environment 7. 20 0.8 Environment 2 0.64 0.6 91,762.77 Social 5.82 Social 6 8.1 0.4 tCO e 2 Governance 0 0.00 0.2 Governance 6.00 Overall 8 8.74 0 Environment Social Governance 0 1 2 3 4 5 6 7 8 9 10 Low 7-10 Moderate 3.01-6.99 Total financed emissions (Scope 1+2) High risk Moderate risk Low risk Substantial 0-3.00 Non rated Overall portfolio tail risk Portfolio E, S & G pillar risk distribution ESG tail risk proifle Sector distribution of tail risky holdings 1 Total (based on PF weight) 88.22% 8.74% No tail risk (36) Tail risk (8) No-rated (8) 88.22% 8.74% 6.3% 1.0% 6.3% 1.0% 0.8 No tail risk (36) Tail risk (8) Non-rated (8) Consumer staples Others Consumer staples Others E 0.6 96.32% 3.04 9.5% 9.5% No tail risk (42) Tail risk (2) Non-rated (8) Industrials Industrials 0.4 S 50.2% 88.86% 8.10% Tail risk Materials Tail risk 50.2% 0.2 Materials No tail risk (38) Tail risk (6) Non-rated (8) 32.9% 0 G 32.9% Communication Environment Social Governance 96.96% 3.04 Communication serivices No tail risk (44) Tail risk (0) Non-rated (8) serivices Low 7-10 Moderate 3.01-6.99 No tail risk Tail risk Non-rated Substantial 0-3.00 Non rated No tail risk Tail risk Non-rated 20 AllianzGI TCFD Report 2021

04.2 Risk management PAI dashboard Portfolio carbon footprint Total ifnanced emissions Weighted Average Carbon Intensity Coverage 91,762.77 tCO2e 143.85 tCO2e per EUR m revenue 96.7% of total Portfolio Value 91,762.77 Sum of ifnanced emissions Scope 1+2 Emission over revenues weighted by share of Weighted from total NAV tCO e Portfolio carbon intensity total EQ and FI [corporate and agency] value 99.24% of Weight of total issue assessed 2 45.63 tCO2e per EUR m invested Weight from total equity and ifxed income Total ifnanced emissions over total EQ and FI [corporate and agency] value [corporate and agency] value Total financed emissions (Scope 1+2) Portfolio Principal Adverse Impact (PAIs) – Totals Fossil fuels Thermal coal Biodiv land use Labor Labor Female UNGC HR Carbon emissions Combined PAI Totals any Tie any Tie MGMT SCO compliance broad compliance core directors compliance compliance reduction CEO chair overall Total # of PF holdings 2 1 0 0 0 3 0 0 14 1 16 Total % of PF value 1.69% 0.88%0.00% 0.00% 0.00% 3.41% 0.00% 0.00% 18.18% 0.59% 19.65% AllianzGI TCFD Report 2021 21

04.2 Risk management Coal exclusions Our new ifrm-wide exclusion policy is one of our key transition risk mitigation policies, annual revenue from thermal coal extraction, and companies where more than 30% of and it is an example of our commitment to tackling climate change by divesting from their electricity production is based on coal. This policy has become effective starting in 1 December 2021 for all existing funds for which AllianzGI acts as management company the single largest source of carbon emissions. We have a ifrm-wide exclusion policy that includes a dedicated thermal coal policy. and has been the default policy for all new funds and mandates after this date, subject to 2 authorisation of the relevant jurisdictions and completion of relevant documentation. According to the International Energy Agency, thermal coal-ifred electricity This new exclusion policy is a further example of AllianzGI’s commitment to tackling generation is the single largest contributor to human-induced global temperature climate change by divesting from the single largest source of carbon emissions. increase, accounting for about 30% of >1°C increase in global average annual surface 3 AllianzGI started restricting investment in coal in its sustainable strategies in 2019. temperatures above the pre-industrial levels already observed. According to this policy, AllianzGI refrains from investing in companies that derive more than 30% of their We apply even stricter criteria for our sustainable minimum exclusion (see link). 1. This Policy is applicable to mutual funds for which Allianz Global Investors is acting as management company. For institutional funds and mandates, application of the Policy including its implementation date is subject to the consent of the respective clients. 2. Thermal coal refers to the use of coal in power generation as well as the mining of thermal coal. It does not apply to metallurgical coal - coal utilized in industrial production process, e.g. making of steel, cement, iron ore or other heavy metals - as there are no commercially viable alternatives available at scale yet. 3. https://www.iea.org/reports/global-energy-co2-status-report-2019/emissions For more information see our Firm-wide Exclusion Policy on our website. For more information see AllianzGI Climate Policy Statement 22 AllianzGI TCFD Report 2021

04.3 Risk management 3. Processes for identifying, assessing, and managing associated with not meeting company sustainability climate change. We prioritise them based on the size climate-related risks are integrated into the organisation’s targets, such as corporate emission targets. of our holdings per market or portfolio, and also factor overall risk management Sustainability risk factors that relate to the investment in priorities of our clients. We observe an increasing Risk management along the value chain process are included in portfolio-related risks. The number of requests from clients for engagement, in We consider risk management to be an integral part of general strategy for management of sustainability particular on topics such as climate and energy transition. our business processes throughout the value chain, from risk factors is to follow the management approach This has prompted us to make these topics a priority of client onboarding and portfolio risk management to for the primary underlying risk. our engagement programme in 2021 and beyond. monitoring operational risks. Risks are addressed as part Active stewardship We believe this two-pronged approach will allow us to of an overarching reporting and controlling framework As an active investment manager, we are committed to achieve better balance between ESG risk reductions covering both qualitative and quantitative risks for each driving positive change and believe that constructive in our portfolios and leading clients and companies of our functions along three lines of defence: the ifrst engagement dialogue with investee companies is on an inclusive transition pathway to a sustainable line of defence is where each function is responsible essential. In 2021, we reifned our engagement approach future. The approach also improves our ability to set out for designing and implementing adequate controls to rest on two approaches: engagement objectives clearly at the outset. In 2021, we related to its processes. The second line of defence Risk-based approach: our risk-based approach focuses developed a new engagement template to support us provides independent oversight and challenge of the on the material ESG risks that we identify. The focus of day-to-day risk controls and risk-taking by the ifrst line. with this change of approach and improve the eiffciency This second line of defence is performed by the Legal engagements is determined by considerations such as of recording engagements. The template was rolled and Compliance function and the Risk Management signiifcant votes against company management at past out via a series of workshops within sustainability and function. The third line of defence provides independent general meetings and sustainability issues that we identify investment teams. assurance across the ifrst and second lines of defence. as below market practice. Engagement activities typically The third line of defence is performed by the Internal relate to an investee company’s strategy, operational or Additionally, our TCFD journey plays an important role Audit function. ifnancial performance, capital management, corporate in our proxy voting activities by establishing clearer governance and ESG risks and impacts. strategy and expectations. Our voting records on In addition to the main risk categories of portfolio risk, climate-related shareholder resolutions, demonstrate operational risk, business risk and reputational risk, Thematic approach: we also lead themed engagement strong support for such resolutions encouraging companies AllianzGI considers sustainability risk as transversal projects. These are either linked to our three strategic to pursue the transition to decarbonisation. risk that may be realised in one or more of the main sustainability themes – climate change, planetary risk categories. Sustainability risk refers to ESG events boundaries and inclusive capitalism – or related to In 2021, a notable change to our guidelines included or conditions which, if they occur, may potentially have governance themes within speciifc markets or more voting rules on “Say on Climate” resolutions. As this type signiifcant negative impacts on products, proiftability broadly. We identify thematic engagement projects of proposal gains traction in some markets, we decided or reputation of AllianzGI. Sustainability risk includes based on topics that we deem to be important for our to update our guidelines to be more transparent and climate change risks for instance and also includes risks portfolio investments, for example energy transition or detailed about our approach. AllianzGI TCFD Report 2021 23

04.3 Risk management Case study 5 Engaging oil and gas companies on the energy transition Our increasingly thematic and focused approach to engagement As an example, in the context of this programme, we engaged one sense of the level of accountability, transparency on lobbying, targets organisations where the implications can be most signiifcant, oil major on its climate strategy, targets and progress to inform the executive incentive structure and its alignment with the firm’s such as oil companies. We continued our engagement programme our votes at its AGM and ensure its climate targets were ambitious decarbonisation journey. As a consequence of the dialogue and with oil and gas majors and spoke with energy companies on 27 enough. The firm’s climate approach is supported by a net-zero evidence, AllianzGI supported the firm’s resolution on its climate occasions. We also published a position paper as part of our new ambition by 2050, including all emissions (Scopes 1, 2 and 3) as strategy at its general meeting. “Stewardship Principles” series to explain our role as an active owner well as short- and medium-term targets. The latter is important Ongoing monitoring of progress is key to successful engagement in the sector and our stance on divestment. given that the current decade is critical to decarbonising the firm’s outcomes. We will continue to track the company’s climate action Read the paper here: Link primary energy mix. Through this engagement, we gained a good and net zero alignment. Case study 6 Case study 7 Scrutinising progress on climate change strategies Linking engagement and AGM vote for a high emitter In 2021, we adopted Climate Engagement with Outcome (CEWO) approach. This approach was ifrst established to We held numerous discussions (bilaterally and collectively) with a large engage with high emitting companies with regard to GHG emissions (Scope 1 and 2). It enables us to understand international mining company. The company is a large emitter and is held the climate pathway of these companies and to identify credible yet ambitious climate goals that the company aims by a number of our funds. Our discussions covered wider governance and to achieve over a specified timeframe. This investment approach allows us to systematically screen and evaluate environmental topics and speciifcally addressed climate change issues companies’ climate profiles, including related social and governance indicators. The feedback we collected, along ahead of the AGM vote on the company’s climate strategy. We engaged with our discussions in related engagement meetings, provided us with in-depth insights into where companies stand the company to get a deeper understanding of the challenges faced, its when it comes to implementing climate strategies, the specificity of pathways, how embedded climate is in strategy framework and future ambitions related to Scope 3 emissions. Following planning, alignment of management interests, dedicated capital expenditures to sustainable products and solutions, our discussion, the board chairman reached out to address some of our key and just transition. This allows us to assess the ambition and credibility of the pathway and where best to engage in concerns on science-based targets and their roadmap for reduction targets, future to ensure its execution. While most of our engagements covered equity and fixed-income holdings, in 2021 including Scope 3. We fed back considerations directly and via an Investor 16 engagements were dedicated to fixed-income funds only. At the time of engagement, our holding in one US Forum co-ordinated group meeting to ensure our questions were clariifed petrochemical ifrm was mainly via ifxed-income asset classes, with much smaller investment through equity holdings. ahead of the vote. Ultimately, we were comfortable that the company was The fixed-income team consequently became actively involved in the engagement, including company calls. We on the right track and making positive steps. We supported the company wanted to understand whether the company sought to actively shape the transition to a lower carbon business model at the AGM but reserved the right to withhold future support should we feel and if it was using any offsetting mechanisms. We also addressed its stance on lobbying. insuiffcient progress was being made. 24 AllianzGI TCFD Report 2021

05 Metrics and targets We aim to be as transparent as possible in our climate-related profile. This includes disclosure of our investment-related and business operations climate metrics. 1. Metrics used by the organisation to assess climate-related risks and opportunities in line with its strategy and risk management process At AllianzGI, we aim to avoid climate-related risks and Impact climate-related metrics which include portfolio metrics at both company and portfolio level. It includes to be aware of opportunities and have thus created absolute and relative emissions, an assessment of forward-looking GHG emissions trajectories, carbon tools that allow us to monitor various relevant metrics. companies involved in the most harmful business emissions data and a physical risk assessment. Policies have also been implemented in order to limit activities, namely coal and fossil fuels, as well as which In order to further complete our climate-related risk our exposure to companies which might face transition companies do not have formal targets in place to and opportunities assessment, we are also currently in the risks in the future. reduce their carbon emissions. process of reviewing temperature alignment solutions. In Our ESG Hub, mentioned in section 4.2,. integrates We have also developed a tool detailed in section 4.1. order to limit transition risks, we have implemented a ifrm several Sustainability Risks and Principal Adverse which gathers various physical and transition risks wide coal exclusion policy. AllianzGI TCFD Report 2021 25

05.2 Metrics and targets 2. Disclosures: Scope 1, Scope 2, (and, where Investment-related climate metrics appropriate) Scope 3 GHG emissions and related risks. Listed equity assets Our measured investment-related carbon footprints Indicator Unit 2021 2020 2019 are based on the issuers’ carbon emission data from Total ifnanced emissions mn tCO₂e 15.22 12.10 15.27 data providers. Listed equity and corporate bond assets are used in calculating the carbon footprint. Total carbon intensity tCO₂e/€ mn invested 47.80 50.50 76.20 For this year’s TCFD report, we have made a change Weighted average carbon intensity tCO₂e/€ mn revenues 119.90 130.80 142.30 in the methodology as we have decided to replace Emissions data coverage of listed equities AuM % 98% 99% 97% the use of enterprise value (EV) by enterprise value Corporate bonds assets including cash (EVIC), following its adoption by the EU Indicator Unit 2021 2020 2019 Technical Expert Group on Sustainable Finance and the Total ifnanced emissions mn tCO₂e 13.72 17.94 16.87 EU benchmark regulation. We have also implemented Total carbon intensity tCO₂e/€ mn invested 77.90 119.80 118.70 a new waterfall process, which allows us to get a better Weighted average carbon intensity tCO₂e/€ mn revenues 192.20 201.70 206.90 data coverage of emissions, combining data from data Emissions data coverage of corporate bonds AuM % 94% 89% 86% providers. The data from 2019 and 2020 have been recomputed following this new methodology to provide Green assets comparable results. Indicator Unit 2021 2020 2019 Investments in renewable energy € mn 5,185.95 4,756.27 5,307.00 Investments in green bonds € mn 10,017.69 6,468.07 4,557.00 26 AllianzGI TCFD Report 2021

05.2 Metrics and targets Carbon footprint Unit 1. Absolute Carbon Emissions (Scope 1+2) =issuer's emissions tCO₂e i n € investment i × issuer's emissions ∑ i 2. Total Financed Emissions (scopes 1 + 2) = issuer's EVIC tCO₂e i=1 i 3. Total carbon intensity = Total market value tCO₂e/mn invested n 4. Weighted average carbon intensity =∑ Portfolio weight × tCO₂e/mn revenues i=1 i 5. Emissions data coverage % Where: Issuer’s emissions i = scope 1+2 emissions from issuer i. Investment i = Exposure in EUR for the issuer i in the Data come from MSCI and Reifnitiv when MSCI data investment portfolio. For equity and corporate bond are not available. investments (ex-derivatives) this corresponds to the market Issuer’s enterprise value including cash (EVIC) i = the sum of value in EUR. the company’s market capitalization, non-redeemable preferred Total market value = Sum of Equity and Fixed Income stock, total debt and minority interest at year end. (Corporates and Agencies) holdings value that are in scope Issuer’s sales i = Company’s sales data as given by Reifnitiv. for carbon footprinting. For equity and ifxed income, it refers to the identiifed company. Exchange rates used to convert the enterprise value and € investment market capitalisation as well as sales into EUR refer to the Portfolio weight i = i WM/Reuters exchange rates (London 4pm closing spot rates). Portfolio market value Data source: MSCI/Refinitiv AllianzGI TCFD Report 2021 27

05.2 Metrics and targets Example client reporting carbon portfolio overview metrics Coverage Total carbon emissions Carbon intensity by weight Emissions scope 1+2 Relative carbon footprint Weighted average carbon intensity Portfolio 94.1% 3'094.8 104.9 288.9 Benchmark 98.7% 2'504.9 84.9 195.9 Market value tCO₂e t CO₂e/EUR m invested t CO₂e/EUR m revenue This report analyses a portfolio of securities in terms of carbon normalised measure of a portfolio’s carbon dioxide emissions measures the portfolio’s exposure to carbon-intensive companies. dioxide emissions invested. It provides a relative comparison to investment contribution. It is deifned as the total carbon emissions Therefore, it is applicable for comparison across different asset a market benchmark where available. The metrics provided in of the portfolio per million EUR invested. This metric enables classes. All carbon emissions are computed based on Scope 1 the table above include absolute and relative ifgures for portfolio comparisons with a benchmark, between multiple portfolios, and Scope 2 emissions data. Scope 1 aims to measure all direct carbon emissions as well as carbon intensity measures. The total over time and regardless of portfolio size. The weighted average emissions from the activities of a corporate or under their control. carbon emissions aims to answer “What is my portfolio’s absolute carbon intensity is disconnected from ownership and thus does not Scope 2 aims to measure all indirect emissions from electricity level of carbon footprint?” The relative carbon footprint is a capture the investor’s contribution to climate change, but rather purchased and used by the corporate. 15% 1%1% 100% Portfolio 37% 15% Benchmark 75% 16% Industrials Industrials Sector Utilities Contribution Utilities 50% weight All other sectors to emissions All other sectors Health care Health care 25% 32% 83% 0% Carbon intensity The portfolio’s intensity is 56.5% higher than the benchmark. The sectors Industrials, Utilities, All other sectors (per GICS classiifcation) in the portfolio make up 84.8% of the weight vs. 99.2% of the contribution to emissions. Calculations: Each holding’s contribution to the carbon footprint is calculated on an enterprise value ownership basis. Analysis is based on Scope 1+2. 28 AllianzGI TCFD Report 2021

05.2 Metrics and targets Top ifve absolute contributors ESG report statistics The list below shows the five individual companies 13% Number of portfolio holdings 39 contributing most to the greenhouse gas emissions Number of issuers with an ESG rating 39 of a fund. The chart on the right contrasts this with Weighting of the top five contributors Percentage of portfolio NAV covered 94.13% the value of those ifve companies within the portfolio. in the portfolio As not all companies disclose their greenhouse gas Portfolio NAV covered (in m EUR) 27.78 emissions, we show in the “Data Source” section if Percentage of the top five contributor the emissions data used has been disclosed by the emissions of the total portfolio emissions ESG benchmark statistics respective company or was approximated through Number of benchmark holdings 1,480.0 our proprietary methodology. 81% Number of issuers with an ESG rating 437.9 Top ifve absolute contributors Percentage of portfolio NAV covered 247.8 Company Financed emissions % of total Portfolio 19% Benchmark NAV covered (in m EUR) 196.6 (tCO₂e) portfolio emissions weight 1 Company 1 1,480.0 47.82% 3.42% Carbon report statistics 2 Company 2 437.9 14.15% 2.90% 5% Number of portfolio holdings 39 3 Company 3 247.8 8.01% 2.88% 6% 48% Number of issuers with an ESG rating 39 4 Company 4 196.6 6.35% 1.90% Percentage of portfolio NAV covered 94.13% 5 Company 5 151.3 4.89% 2.32% 8% Portfolio NAV covered (in m EUR) 27.78 14% Carbon benchmark statistics Top ifve carbon intensive ifrms per m EUR invested Highest contributor to emissions Number of benchmark holdings 1,480.0 Company Financed emissions % of total Portfolio 2nd highest contributor to emissions Number of issuers with an ESG rating 437.9 (tCO₂e) portfolio emissions weight 1 Company 1 1,480.0 47.82% 3.42% 3rd highest contributor to emissions Percentage of portfolio NAV covered 247.8 2 Company 2 437.9 14.15% 2.90% 4th highest contributor to emissions Benchmark NAV covered (in m EUR) 196.6 3 Company 4 196.6 6.35% 1.90% 5th highest contributor to emissions Percentage of emissions of the Information value of reports may be limited when ESG research 4 Company 3 247.8 8.01% 2.88% non-top five contributors data coverage is below a certain threshold 5 Company 5 151.3 4.89% 2.32% The tables provide descriptive statistics on portfolio and benchmarks used in the report including data coverage for ESG and carbon reporting. Percentage of portfolio NAV covered mentioned above considers corporate positions either equity, credit fixed income or sovereign fixed income where ESG data including carbon data is available. Cash, derivatives and mutual funds holdings are not considered in the ESG report. AllianzGI TCFD Report 2021 29

05.3 Metrics and targets 3. Targets used by the organisation to manage climate At AllianzGI, we will focus continuously on our net-zero business operations in line with the science underpinning related risks and opportunities and performance commitment as a signatory of NZAM initiative. In the the Paris Agreement climate goal. In 2020, it set GHG against targets near future, we will increase the scope of our assets and emission targets to 2025 in line with the latest climate Managing climate impact of our investments set intermediate targets for our third-party client assets. science. AllianzGI has committed to reduce GHG We will continue to actively engage with our institutional emissions by 38% per employee by 2025 (against a We aim to be as transparent as possible in our 2019 baseline) across Scope 1, 2 and selected Scope 3 climate-related proifle, including the disclosure of our clients and distributors on integrating net-zero objectives emissions (covering energy-related emissions, business investment-related climate metrics. As a committed in their investments and into our mutual funds. We plan travel and paper use). 1 4 signatory of the NZAM initiative, we support the goal to review our targets and progress annually. of net-zero greenhouse gas emissions by 2050. Managing the environmental impact of our operations We actively measure and manage our environmental footprint. The tables below provide detailed overviews of As the ifrst step, these targets cover listed equity, As part of our commitment to a sustainable future, we environmental impact of our operations and sustainability corporate debt, infrastructure equity, and infrastructure manage the environmental impacts of our operations related targets and achievements. debt, and relfect the targets set in 2021 by Allianz for its and aim to be a role model in delivering our own 2 proprietary assets based on its commitment as a member targets on climate change and the environment. Our Corporate-level related climate metrics of the UN-convened Net-Zero Asset Owner Alliance. efforts contribute to Allianz goals, including working towards sourcing 100% renewable electricity for our Indicator Unit 2021 2020 2019 The assets in-scope for these targets represent 12% operations by 2023 and reducing greenhouse gas GHG emissions tCO e/employee 0.9 2.1 3.95 of AllianzGI’s overall assets under management. The (GHG) emissions by 38% per employee by 2025 against 2 submitted targets include: a 2019 baseline. Energy consumption GJ/employee 16.1 18.7 20.6 – Listed equity and corporate bonds – a 25% GHG Business travel tCO e/employee 0.4 0.5 2.16 reduction, scopes 1 and 2, by the end of 2024 Our carbon reduction strategy is designed to reduce 2 (baseline year: 2019). GHG emissions from material sources, namely energy Paper consumption kg/employee 9.4 19.4 27.4 use for oiffce buildings and IT, business travel and paper 3 7 – Infrastructure equity – a 28% GHG reduction, scopes 1 use. The strategy focuses on energy-eiffcient planning, Water consumption m/employee 24.9 35.4 26.0 and 2, by the end of 2025 (baseline year: 2020). construction and operation of buildings, sourcing green Waste kg/employee 75.3 89.7 149.0 – Infrastructure debt – our target is to grow the share electricity and using carbon-eiffcient vehicles. Allianz of low-emitting and EU taxonomy-eligible assets.3 has committed to set long-term climate targets for its 1. Net Zero Asset Managers initiative 2. Allianz Sustainability Report, page 85, Allianz Grouo Sustainability Report 2021 3. For more information on the Net-Zero Asset Owner Alliance commitment of Allianz Group, please see the Allianz Group Sustainability Report: https://www.allianz.com/en/sustainability.html 4. For more information, please read our Sustainability and Stewardship Repor t Further information – including our ifrm-wide exclusion policy, Global Corporate Governance Guidelines and Climate Policy Statement – is available here: https://www.allianzgi.com/en/our-ifrm/esg/documents#keypolicydocumentsandreports 5. GHG emissions data (old absolute: 3.5 tonnes) has been restated for 2019. 6. This business travel data (old absolute : 1.9 tonnes) has been restated for 2019. 7. Water consumption (old absolute : 20.9 m3) has been restated for 2020. 30 AllianzGI TCFD Report 2021

05.3 Metrics and targets Topic Targets Progress and achievements 2021 GHG emissions Reduce GHG emissions by 38% per employee by 2025 Achieved a 77% reduction in 2021 (2020: 46%) compared compared with 2019. to 2019. Energy Reduce energy consumption in our oiffce buildings by Achieved a 22% reduction in 2021 (2020: 9%) compared consumption 10% per employee by 2025 compared with 2019. to 2019. Renewable As a signatory of the RE100 initiative, Allianz has committed Achieved 100% renewable, low-carbon electricity for electricity to source 100% renewable electricity (RE) for its group-wide our operations in 2021. operations by 2023. Business Reduce GHG emissions from business travel by 20% per Achieved a 81% reduction in 2021 (2020: 76%) compared travel employee by 2025 compared with 2019. to 2019. In addition to our net-zero goals on the investment Paper Reduce paper consumption by 20% per employee Achieved a 66% reduction in 2021 (2020: 29%) compared side, we have also committed to reducing our consumption by 2025 compared with 2019. to 2019. greenhouse gas footprint as a business, covering Water Reduce water consumption by 15% per employee Achieved a 4% reduction in 2021 (2020: a 36% increase) energy-related emissions, business travel and consumption by 2025 compared with 2019. compared to 2019. paper use. I’m proud of the progress we have made Waste Reduce waste by 14% per employee by 2025 compared Achieved a 49% reduction in 2021 (2020: 40%) compared so far and especially proud of how engaged our with 2019. to 2019. colleagues are on this topic. Many are taking their own conscious steps to reduce their carbon footprint For GHG emissions, achievements in 2021 were mainly occupancy sensors and refurbishment activities as well as they want to contribute to a cleaner planet for due to increased use of renewable power, improved as increased remote working. all of us today and for generations to come. energy management, and reduced business travel. While business travel accounted for 40% of GHG We expect to include GHG emissions from flexible and emissions from operations in 2021 (2020: 25%), overall Markus Kobler hybrid working within scope of our future reporting emissions associated with travel are decreasing. Chief Financial Oiffcer to reflect infrastructure changes as the way we work Covid-19 measures played a material role in reducing continues to evolve. business travel emissions along with our new Global For energy consumption, the reduction was mainly Travel Policy that prioritises client-facing business travel due to energy-saving initiatives such as installation of over travel for internal reasons. AllianzGI TCFD Report 2021 31

Allianz Global Investors Global Head of Sustainable and Impact Investing 3 Boulevard des Italiens 75002 Paris France www.allianzgi.com/sustainability Investing involves risk. The value of an investment and the income from it will lfuctuate and investors may not get back the principal invested. Environmental, Social and Governance (ESG) strategies consider factors beyond traditional ifnancial information to select securities or eliminate exposure which could result in relative investment performance deviating from other strategies or broad market benchmarks. Equities have tended to be volatile, and do not offer a ifxed rate of return. Investing in the bond market is subject to risks, including market, interest rate, issuer, credit, inlfation risk, and liquidity risk. The value of most bonds and bond strategies are impacted by changes in interest rates. Bond prices will normally decline as interest rates rise. The impact may be greater with longer-duration bonds. Credit risk relfects the issuer’s ability to make timely payments of interest or principal – the lower the rating, the higher the risk of default. "Incorporating alternative investments into a portfolio entails substantial risks and is not suitable for all investors. Investors must be aware that an investment in infrastructure is highly speculative and it is possible to lose your entire investment. Investments in Infrastructure are subject to adverse economic & regulatory risks affecting infrastructure companies. Infrastructure issuers may be subject to regulation by various governmental authorities and may also be affected by governmental regulation of rates charged to customers, operational or other mishaps, tariffs, and changes in tax laws, regulatory policies, and accounting standards. The market for infrastructure investments is highly illiquid, which could prevent the an investor from purchasing or selling these investments at an advantageous time resulting in a loss to the investor. Investing in a limited number of issuers or sectors may increase risk and volatility. Past performance is not indicative of future performance. This is a marketing communication. It is for informational purposes only. This document does not constitute investment advice or a recommendation to buy, sell or hold any security and shall not be deemed an offer to sell or a solicitation of an offer to buy any security. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer or its aiffliated companies at the time of publication. 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Allianz Global Investors Asset Management Indonesia licensed by Indonesia Financial Services Authority (OJK). allianzgi.com © 2022 Allianz Global Investors 2168076 | 6097 AllianzGI TCFD Report 2021