ESG Integration Framework 04.3 Integrating human rights due diligence in Allianz has collaborated with several NGOs to identify risks to the our business activities business. Those deemed as most critical include: • Insufficient Human Rights governance 04.3.1 Integration across all core business activities • Workforce risks • Risks to local communities As a corporate insurer and investor, Allianz has developed a human • Resettlement risks rights due diligence process as part of its overall ESG approach. This process is integrated into its broader geographic risk management 04.3.2 Engagements with investees and clients system to ensure a quick and rigorous implementation. The organization uses a combination of a sector- and country approach Human rights issues can also trigger systematic dialogues through for its due diligence. Allianz has developed thirteen ESG guidelines Allianz’s investee engagement processes. For further details, please for sensitive business sectors, which include a sector-specific human see section 03.7.1. rights guideline (see section 03.4.7). Thus, relevant human rights In the insurance business, Allianz may also engage clients on human aspects are reviewed as part of the overall risk assessment for rights grounds through our risk dialogues. For further details, please any insurance and investments into non-listed asset classes in the see section 03.8. respective sector. In addition, Allianz has developed a watch list for sensitive countries 04.3.3 Investment exclusions of sovereign issuers where systematic human rights violations occur. For any business in those countries, the ESG Sensitive Business Guideline for Human Allianz restricts investments into sovereign issuers of countries with Rights (see see section 03.4.7 for the guideline and section 03.5 for an elevated risk of human rights violations. In very severe cases, additional details about the sensitive countries list) is being applied. Allianz may restrict investments not only in governmental issuers but When a human rights risk is identified by an underwriter or investment also all issuers (sovereign and corporate) within the given country. manager by applying a sector guideline or the ESG Sensitive The organization regularly reviews these country lists taking data Business Guideline for Human Rights, a mandatory referral process from external data providers and in-house human rights research starts for further due diligence by ESG experts and the involvement into consideration. of central units such as the risk and communication departments. For further details, please see section 03.9.4. Where an issue is detected and the (re)insurer / investor has leverage (in a lead position or with good contact with the client/ broker/investee company), engagement is encouraged to address and mitigate the human rights risk. If no mitigation measures exist or if leverage cannot be increased, the risk might be unacceptable. Factors which may influence this decision include the severity of the human rights violation, the significance of the business relationship as well as own values. 40