Sustainability Report 2021 02.1 Sustainability in insurance 01 Introduction 02.1.1 Integrating sustainability In 2021, 850 insurance transactions were assessed Key developments in 2021 We anticipate the risks of a in insurance for sustainability risks, up from 430 transactions In 2021, our experts worked to further strengthen changing climate 02 Measuring and in 2020. our decarbonization approach. Our long-standing The Paris Agreement emphasizes the role of managing sustainability Embedding sustainability considerations This increase is in line with our expectations given coal phase-out approach was strengthened and insurance in managing the impacts of climate Sustainability in our business activities into our insurance business means we a decreasing risk appetite, new internal guidance expanded (see section 02.2.3 for further details). change. Insurance companies need to address 02.1 Sustainability in insurance are better placed to manage risks and on issues such as decarbonization and human We also announced that we will no longer provide climate change risks in both their insurance and 02.2 Sustainability in opportunities to support sustainable rights, and new technical criteria in underwriting. insurance for dedicated oil sands projects and their investment portfolios. These risks can result proprietary investments See Tables ESG-1 to 3 for additional details. new oil sands pipelines, or to companies deriving from developments in weather patterns (physical 02.3 Sustainability in asset management development. We add value through more than 20 percent of their revenue from risks) and the transformation of business models Sustainability in our organization dialogue with stakeholders and aim to Sustainability risks can be dynamic and complex. oil sands. towards net-zero emissions (transition risks). 02.4 Human resources share our expertise on risk mitigation Being responsible for a large underwriting In 2020, we initiated a pilot to enhance our due 02.5 Customer satisfaction portfolio requires significant resources to In parallel, insurers have a societal role to offer 02.6 Environmental management with the insurance sector. continuously screen and assess risks and engage diligence for Director & Officers (D&O) insurance. affordable insurance protection against extreme We are committed to the UNEP-FI Principles clients and brokers in risk dialogues. In 2021, this resulted in the addition of an ESG weather events such as floods, storms, heatwaves 03 Strengthening for Sustainable Insurance and work so that our D&O Risk Score and other significant ESG KPIs and droughts for their clients. With 1.5°C of global our foundation risk exposure is mostly indirect through the risks Further information about the Allianz to our underwriting due diligence for D&O warming being almost unavoidable according to sustainability approach and processes coverages. We have now launched a similar 1 Allianz carries for its insured clients. We embed relating to our insurance business the Intergovernmental Panel on Climate Change 04 Climate-related strong sustainability risk management throughout project for liability insurance. (IPCC), this is becoming a challenge. It is a key financial disclosure our underwriting processes to limit our exposure can be found in the Allianz ESG reason why Allianz is committed to playing its to indirect risks. Our sustainability referral and Integration Framework. 02.1.2 Climate change part in limiting global warming by the end of this 05 Our universal principles assessment process directs us to identify, assess and Adding value through research and decarbonization century to a maximum of 1.5°C. manage risks. The process is part of the risk and engagement Through our insurance business, With extreme weather events becoming more management framework that is applied to all common and intense, we research the actual and Allianz insurance business globally, whether we To maximize our positive influence and impact, we anticipate risks and protect and care future impacts of climate change to provide the are the lead insurer or part of a panel. we share our sustainability expertise with for people vulnerable to climate change. best possible risk advice to society and customers. When our insurance underwriters identify a our clients, brokers and business partners, We also target our insurance solutions For example, the Allianz Climate Change Risk sustainability risk, they refer the case for assessment and develop our own risk management and and expertise to support the transition Study (ACCRiS) provides inhouse climate risk by the Allianz Global Corporate & Specialty (AGCS) underwriting due diligence. to a low-carbon economy. scores and metrics. These hazard, risk and ESG Business Services and/or Global Sustainability We conduct in-depth research to stay ahead financial impact scores help to assess physical at Allianz SE. Our experts conduct in-depth of emerging issues and inform our evolving Our Climate Change Strategy is focused on climate change risk in investment and insurance assessments on a broad range of sustainability approach to risk identification and management. providing insurance solutions that help customers decisions. In 2021, we developed forward-looking risks. Based on the outcome of these assessments, This includes conducting research to understand respond to a changing climate and facilitate the metrics for river flood and tropical cyclone risk 2 for the time periods they decide whether a transaction may proceed the relevance of sustainability factors on claims development of the low-carbon economy with under two climate scenarios with or without conditions. Conditions may include and underwriting profitability. net-zero emissions in 2050 (see section 01.5). 2030 and 2050. In 2022, we aim to provide metrics monitoring the project/client or engaging in a on hail and coastal flood risk. risk dialogue. If severe, systemic or unmitigable sustainability issues are identified, the transaction may be declined. 1 Intergovernmental Panel on Climate Change Sixth Assessment Report (2021). 2 Representative Concentration Pathway (RCP) 4.5 and 8.5. 18