Sustainability Report 2021 02.3 Sustainability in asset management 01 Introduction For investors seeking greater ESG orientation by the outcomes of engagements and are linked leverage and balance sheet management AllianzGI also continues to support global net- in their portfolios, PIMCO offers a suite of ESG- to the proxy voting process to form a consistent as well as ESG-related topics such as climate zero ambitions via its Private Markets platform. 02 Measuring and dedicated solutions. In 2021, PIMCO enhanced stewardship approach. change targets and ESG bonds, human capital In November, together with IFC and Hong Kong managing sustainability its ESG research frameworks and capabilities, With 299 company engagements covering management, and board qualifications and Monetary Authority, AllianzGI set up the world’s Sustainability in our business activities particularly for municipal bonds and securitized 482 topics in 238 companies and 27 markets, composition. Of the 1,585 corporate bond issuers first cross-sectoral portfolio of emerging-market 02.1 Sustainability in insurance assets. The platform builds on PIMCO’s core AllianzGI showcased its strong commitment engaged, more than 650 issuers were engaged loans aligned with the Paris Agreement called the 02.2 Sustainability in ESG process and sustainability-specific features to engagement in 2021 and voted at 10,190 in depth, with repeat discussions on specific Managed Co-Lending Portfolio Program (MCPP proprietary investments focused in three areas: exclusions, evaluation, shareholder meetings. In 68 percent of meetings topics and milestones monitored and tracked. One Planet). The strategy supports the IFC and 02.3 Sustainability in asset management and engagement. they voted against management, withheld or These issuers represent almost 60 percent of the Allianz Group to make 1.5°C-aligned investments Sustainability in our organization Engagement and stewardship abstained with at least one vote. These figures firm’s corporate holdings by market value. in emerging markets. AllianzGI also announced at 02.4 Human resources reflect AllianzGI’s willingness to vote against Read more in PIMCO’s ESG Investment report. the U.N. Climate Conference in Glasgow the launch 02.5 Customer satisfaction Our asset managers engage proactively proposals that do not meet its expectations as of the Emerging Market Climate Action strategy 02.6 Environmental management with investee companies to build sustainable well as fulfilling its duty to act in the interests of Climate engagement (EMCA), a public-private partnership, which will businesses. They engage in regular dialogue clients by considering each proposal on merit. Our asset managers have developed robust invest in climate-focused private equity funds and 03 Strengthening and seek to present a viewpoint, effect positive Read more in AllianzGI’s methods to incorporate climate considerations projects active in emerging markets and developing our foundation change and monitor results of engagement. stewardship statement. into our investment decisions and processes. countries with a focus on climate mitigation, By investing in corporates willing to improve Supporting the companies we invest in to develop climate adaptation, and access to electricity. 04 Climate-related their ESG practices, we believe we can drive PIMCO’s 80+ global credit research team engaged their transition pathways is one of the ways with AllianzGI has also enhanced its company-wide financial disclosure greater change than through exclusions alone. with 1,585 corporate bond issuers representing which we broaden our positive impact. exclusions policy, including a dedicated coal 05 Our universal principles Our goal is both to find the best opportunities in roughly 80 percent of PIMCO’s corporate holdings policy for the first time. This enhanced exclusion the market and also to create them by engaging by market value. Topics of discussion with company Last year, AllianzGI introduced a specific element policy effective from December 2021, further with issuers. Our investment views are influenced management related to corporate strategy, of climate engagement related to its ‘Climate underlines AllianzGI’s commitment to tackling Engagement with Outcome’ program. Under climate change by divesting from the single the program, in portfolios applying the program largest source of carbon emissions – coal. PIMCO integrates ESG factors from a top down and bottom up perspective the highest emitters are identified, their climate Read more about AllianzGI’s Climate Top profiles are fully scoped, and it seeks to engage Engagement with Outcome approach as well Themes identified through annual Secular Forum process down with these companies to understand their climate as the Private Market launches, MCPP One Speakers include Nobel Prize winners, heads of state, renowned academics, global central bankers transition pathway towards a Paris Agreement Planet and EMCA. aligned economy. It will actively engage with the Climate change Geopolitics Corporate governance highest emitters (Scopes 1 and 2) on ambitious PIMCO’s broad climate research evaluates climate ‘outcomes’ encompassing not only scale climate-related risks and opportunities within Inequality Demographic trends Cybersecurity of decarbonization, but also how this is being specific sectors and issuers, typically beginning achieved (and aligned with Just Transition). with two broad categories: These targets are considered within the context 1. Transition risks: for example tighter Specialty desks, credit analysts, security selection of sector and peers to ensure both credibility and Understanding all material risks is critical to making sound investment decisions, for example: ambition. The approach combines this with the regulations on carbon emissions. Social firm’s Sustainability Minimum Exclusions. 2. Physical risks: for example how the rising Environment Ensures sound product safety Governance intensity and frequency of extreme weather Employs resource efficiency from and quality standards to protect Management’s capacity to events affects critical assets and natural waste to energy consumption end-users manage risk over the cycle Bottom resources used or relied upon by the issuer. up 34