ESG Integration Framework 03.9.3 Exclusion of specific issuers following engagement list immediately. In underwriting, the exclusions are implemented on ESG concerns through the AS RRIM processes. As an outcome of the engagement approach, certain companies The composition of the exclusion lists is reviewed regularly and with material ESG concerns may be added to the exclusion lists by updated when necessary. the Chair of the ESG Board upon advice of the engagement team at AIM and Global Sustainability (see section 03.7.1 for details). 03.9.6 Monitoring of exclusions Implementation of these exclusions is managed and monitored AIM has set up an automated system to monitor asset managers’ following the same processes as the controversial weapons and coal compliance with the exclusion policies. In case of non-compliance, exclusions. the responsible investment function works with the asset manager to remediate the issue immediately. 03.9.4 Exclusion of sovereign issues with elevated human Local OE investment management functions are also responsible for rights risks and other ESG concerns monitoring exclusions. The threshold for the Sovereign issuers is reviewed every three years. As part of the exclusion process Global Sustainability and 03.10 Asset manager selection, mandating, AIM conduct a review of the human rights and ESG performance monitoring and review of sovereign issuers. Issuers falling below the threshold represent a high level of risk of human rights and ESG concerns. When new The Allianz ESG Functional Rule for Investments (EFRI) outlines the sovereign issuers are added to the restricted list, any investments key requirements for ESG integration by internal1 and external2 in that sovereign or sub-sovereign entities related to that sovereign asset managers. Furthermore, Functional Rule defines the selection must be sold. process and criteria for external asset managers and requires both Data on the human rights and ESG performance is gathered from internal and external asset managers who are investing proprietary ESG data providers and reviewed by Global Sustainability. assets on behalf of Allianz to integrate ESG considerations as an In case of severe concerns about human rights and ESG, Global integral part of their investment process. Sustainability in alignment with AIM and other functions can The Functional Rule covers all new and updated asset manager recommend to restrict all investments in a country (sovereign and mandates. corporate issuers). In cases where an Allianz operating entity is located in a country 03.10.1 Requirements for asset managers in scope of these exclusions, this specific entity is exempt from The specific requirements for asset managers listed in the EFRI application. include: 03.9.5 Implementation of exclusions • Disclosure of asset manager’s ESG policy and application thereof to Allianz proprietary assets Global Sustainability works with Group Risk to implement the exclusions into the investment systems through the Group Risk 1 Internal asset managers: Allianz Global Investors, Allianz Capital Partners, Allianz Global Restrictions (GRGR) List. This list is updated regularly and Real Estate, PIMCO and assets managed internally by local entities, AIM SE or integrated into Allianz’s investment data systems. Internal and Allianz SE. 2 External asset managers: Any third-party investing proprietary assets on behalf of 35 external asset managers are informed about changes to the GRGR AIM.