ESG Integration Framework managers). This is often linked to the overall due diligence Implementation of the Referral Process across all Allianz entities is related to the transaction in question. an ongoing process. The progress of this implementation as well as • OE or GL ESG Assessments are carried out for those KPI regarding the referral process numbers are reported annually in transactions that were identified during screening. These the Group Sustainability Report. assessments are currently performed by Allianz Global Corporate and Specialty (AGCS) ESG Business Services for all 1 03.4 ESG sensitive business guidelines P&C transactions , by the Allianz Real Estate ESG team for investments in real estate and the Allianz Capital Partners ESG Along with the development of the ESG Referral Process, the ESG team for investments in infrastructure, renewables and private guidelines were developed across thirteen sensitive business areas4 equity. In case no local OE or GL ESG function is in place, for material to Allianz Group. Each guideline is based on internationally example in smaller entities, the Group ESG function supports recognized standards and best-practice. with the ESG assessment. • Group ESG Assessments under AS RRIM occur when an OE Each guideline contains criteria, which are reviewed in the context or GL ESG Assessment detects a material ESG risks. These of a given transaction, to decide whether the transaction must be assessments are carried out by Global Sustainability together referred for an OE/GL and/or Group ESG Assessment. Information with other relevant risk and communications functions under and data used for the review of ESG criteria include for example AS RRIM and the ESG Sensitive Business Guidelines. publicly available sources, ESG-specific data providers, information Following the ESG Assessment by the OE/GL ESG function or Global supplied by the clients, brokers, co-insurers and/or investors. The Sustainability and other relevant risk and communications functions, ESG Guidelines are not exclusion criteria, but criteria that assist all a decision is made whether to parties involved in the ESG screening of a transaction to determine if the transaction is potentially sensitive and must therefore be • proceed with a transaction, referred. 2 • proceed with certain mitigation measures and/or conditions , During the full assessment, the assessing ESG function uses the • escalate for a Group ESG Assessment (at OE/GL level) or criteria as one element of the process to better understand the • decline the business transaction (at Group level). potential ESG risks associated with a particular business transaction. Should the original referring party disagree with outcome of the ESG Referral Process, the party can escalate the referral to the Group 3 Finance and Risk Committee (GFRC) for final review. Allianz’s ability to assess a transaction or place conditions on the business depends on a number of factors. For insurance, if Allianz acts as the primary insurer direct with the client it allows a greater degree of dialogue. If the business is via a broker, Allianz is part of a consortium or has a minority share of the risk, it limits the ability to obtain further information or to engage proactively. 1 AGCS Business Services acts as both an OE and GL ESG function, by providing ESG 4 Sensitive business areas material to Allianz: Agriculture, fisheries and forestry, assessment services to AGCS and all local operating entities for property and casu- agricultural commodities investments, animal welfare in agriculture, betting and alty transactions. gambling, clinical trials, animal testing, defense, human rights, hydro-electric pow- 2 A condition can for example be approval subject to further information being er, infrastructure, mining, nuclear energy, oil and gas, sex industry. Materiality of provided, confirmation of facts by the client or longer term engagement. these issues was determined through a stakeholder dialogue with internal as well 9 3 The GFRC is a committee of the Allianz SE Board of Management. as external (NGO) partners.