C _ Group Management Report We continued to make sustainability a priority in many dimensions of − We have restricted proprietary investments in coal-based business our business in 2021. Our new sustainability structure and governance models and related property-casualty insurance business. Our also emphasizes our sustainability strategy and goals in our criteria for the exclusion of coal-based business models were compensation structures and incentive systems for managers. further expanded in May 2021. Furthermore, we have also sections 01.3 and 05.5 excluded oil sands-based business models since May 2021.1 Group Sustainability Report. − ESG integration in property-casualty insurance is carried out through the application of ESG guidelines and processes. We ground our strategy in proactive risk management to detect and − Further ESG-related measures include our systematic address risks across the businesses. Group risk is responsible for this engagement with investee companies as well as ESG process. We have not identified any remaining principal risks resulting considerations in our selection and management of asset from our operations, business activities, and business relations that managers. could have severe adverse effects on material non-financial matters. Any potential risks and impacts identified throughout our risk In 2021, we continued our project to further strengthen ESG risk assessment have been addressed by the respective concepts we have management by improving the way we identify ESG-related risks in in place, which we describe in this report. transactions (Property-Casualty insurance, proprietary investments, As a global insurer, investor and asset manager, understanding procurement). sustainability issues allows us to reduce risks and capture opportunities The data related to our ESG integration approach is included in in underwriting, claims, proprietary investment management, and our Group Sustainability Report 2021. An in-depth overview of our asset management. For information on climate-related risks and approach and processes to integrating ESG is published in the Allianz opportunities, please refer to the Risk and Opportunity Report. Our ESG Integration Framework at www.allianz.com/esg-framework. concepts for all other matters for which reporting is required will be In our Asset Management business segment, AllianzGI and addressed in subsequent chapters. The ESG approach provides part of PIMCO have developed and implemented entity-specific processes to the foundation for these concepts and is managed by Global manage risks and capture opportunities from ESG issues. For Sustainability. proprietary assets that AllianzGI and PIMCO manage on behalf of other Allianz Group entities, group-level requirements are observed in combination with the asset management entities’ specific approaches. The types of ESG risks Allianz considers to be material in its insurance sections 02.3 Group Sustainability Report. and investment activities are summarized in the Allianz ESG Integration Framework. We published the fourth version of the Framework in 2021. Environmental matters ESG risks can turn into legal risks, reputational risks, supply chain and business disruption risks, quality, operational, human-rights, This section describes the impact of environmental matters on our financial, and/or investment risks for Allianz, its customers, and/or its business activities and relationships as well as the impact of the invested companies. ESG topics are integrated in our insurance, Allianz’s activities and relationships on the environment. Furthermore, investment, and asset management businesses through multiple we describe our concepts for managing these impacts and related instruments. They include internal standards, guidelines, and achievements. processes, such as the Allianz Standard for Reputational Risk and Issue Management (AS RRIM), the Allianz Standards for P&C Underwriting (ASU), and the Allianz ESG Functional Rule for Within our global sustainability approach, the pillar “Low carbon Investments (EFRI). economy, climate change and decarbonization” addresses climate change and environmental issues. Both were identified as top risks in An overview of the Group’s key ESG integration processes is described our materiality analysis. As a company dealing with risk, managing below: impact on environmental matters – and their impact on us – is a key element of our business approach. − ESG risks are managed through the ESG-sensitive business Not only is climate change a major risk for societies and guidelines outlined in the AS RRIM, in underwriting, proprietary economies, it also directly affects our business, from our insurance investments in non-listed asset classes and operations. products to our proprietary and third-party investments, and to our − For investments in listed asset classes, the Allianz ESG scoring company’s operations. We are tackling climate change challenges by approach (defined in EFRI) is applied to manage related risks. promoting the transition to a low carbon economy through our − For proprietary investments, Allianz has excluded investments in investments and insurance solutions. In addition, we actively manage companies involved in controversial weapons since 2011. emissions from our operations in line with the Target-Setting Protocol Additionally, we do not provide insurance cover for activities of the UN-convened Net-Zero Asset Owner Alliance (AOA). related to such weapons. 1_Please refer to the target and achievement table in the Environmental Matters section. Annual Report 2021 − Allianz Group 59