Sustainability Report 2021 02.2 Sustainability in proprietary investments 01 Introduction 02.2.4 Sustainability in real Embedding sustainability in real estate For more detail on Allianz Real Estate’s To meet our targets, we are working to address estate investments Allianz Real Estate’s ESG integration framework ESG integration approach, see the Allianz challenges posed by a lack of industry-wide 02 Measuring and is designed to improve the sustainability Real Estate website and the Allianz ESG standards and availability of high-quality data managing sustainability We are working to reduce the GHG performance and transparency of real estate Integration Framework. by providing detailed guidance and instructions Sustainability in our business activities emissions of our portfolio to net-zero assets and address issues such as physical for our external partners and embracing new 02.1 Sustainability in insurance by 2050 by embedding sustainability climate risks, reducing the risks of obsolescence Decarbonizing our real estate portfolio technologies such as smart meters to inform 02.2 Sustainability in and depreciation. In 2021, we further embedded our sustainability sustainability data-based decision-making. proprietary investments criteria and collaborating with others approach in the European Debt business by With the scope of our ambition including 02.3 Sustainability in asset management to strengthen sustainability activities Our framework is based on three key areas of increasing analysis and benchmarking of energy operational emissions from areas not under our Sustainability in our organization across real estate management activity: assess, engage and improve. and carbon-related data during technical due direct control, such as tenant areas, achieving it 02.4 Human resources and investment. 1. Assess diligence and energy performance data collection will require significant engagement and 02.5 Customer satisfaction Screening assets for sustainability issues is an during the term of the loan. We also amended collaboration. It is a challenge to implement KPIs 02.6 Environmental management Allianz Real Estate develops and executes integral part of our decision-making process. the environmental due diligence scope of work and disclose progress on decarbonization efforts tailored portfolios and investment strategies for Our primary focus is on carbon emissions for direct investments to consider decarbonization as appropriate evidence and robust controls 03 Strengthening Allianz insurance companies and pension funds and energy efficiency and we also look and required actions and investments in cannot easily be implemented to meet highest our foundation around the world, as well as for third-party clients. at governance and social and well-being more detail. assurance requirements. In 2021, Allianz Real Estate and other Allianz standards. Any equity investment must have We are working to reduce the GHG emissions of Among others, new acquisitions will be assessed 04 Climate-related operating entities invested proprietary assets an environmental or sustainability certification our real estate portfolio to net-zero by 2050 in line against 1.5°C GHG and energy pathways and the financial disclosure totaling € 6.4 billion (2020: € 5.6 bn) in green (e.g. BREEAM or LEED). with our Group commitment. investment needed to meet related targets will 05 Our universal principles buildings, including equity and debt investments. 2. Engage be considered. Procurement of renewable energy This equals a share of 11 percent of our total real We aim to influence our partners and tenants Our aim is to align with the 1.5°C decarbonization and engagement to convince tenants to switch to estate portfolio of € 59.5 billion. to follow our lead and take an active role to pathways for the global real estate sector green electricity will be a priority (e.g. via standard With the increasing focus on decarbonization, bring about change, for example by promoting published by the Carbon Risk Real Estate Monitor lease agreements). Where deep refurbishments real estate assets face significant costs in ‘green leases’ which include provisions (CRREM). This translates into a 25 percent carbon are required, completed buildings will be highly meeting higher energy efficiency standards and designed to reduce environmental impacts. emission reduction target for the global portfolio energy efficient to ensure long-term compliance 1. addressing demands from investors and tenants. by 2025 with the 1.5°C GHG pathway. Real estate is also highly exposed to physical 3. Improve climate risks and large-scale investment may Key to improving our portfolio is the be required to improve resilience – for example decarbonization of our direct investments through relocation of critical equipment to which equate to half of our investment reduce potential flood damage or upgrading air portfolio. By improving the energy efficiency conditioning systems to ensure reliability during and replacing traditional energy sources with extreme heat events. low-carbon alternatives we are transforming our buildings for the future. 1 Against the initial 2019 baseline covering the global direct equity real estate portfolio. 32