Sustainability Report 2021 02.2 Sustainability in proprietary investments 01 Introduction 02.2.3 Climate change Allianz has set an intermediary target to reduce performance and how to set appropriate targets. gas downstream. Most of oil and gas companies and decarbonization GHG emissions by 25 percent by year-end 2024 Allianz is working with the U.N.-convened Net- have not yet set Scope 3 targets making it 02 Measuring and compared to a 2019 baseline for its equity and Zero AOA to finalize the methods for sovereign difficult to track progress. We are reviewing our managing sustainability The financial sector has a crucial role tradeable corporate bonds portfolio. In addition bonds as next asset class. We will set targets approach to engaging companies around Scope Sustainability in our business activities to play in enabling a low-carbon future. to traditional investment criteria, we assess for this asset class within 12 months after the 3 emissions. 02.1 Sustainability in insurance As asset owners, we are uniquely whether equities and corporate bonds are in recommended methodology is released by We also aim to increase our bilateral engagement 02.2 Sustainability in line with a 1.5°C pathway. In 2021, Allianz has the AOA. activities by at least 100 percent by end of 2024. proprietary investments positioned to help shape the global reached the -25 percent decarbonization target Engagement at the industry level In addition we will increase our participations in 02.3 Sustainability in asset management economy and financial systems. of its equity and corporate bonds portfolio. collaborative engagements such as CA100+ and Sustainability in our organization This includes driving the decarbonization Target achievement was supported by estimated To support the shift towards a low-carbon will drive sector and asset manager engagements 02.4 Human resources of investment portfolios and supporting four to five percent from COVID-19 shutdowns economy, we are also active at the industry sector activities as part of the AOA. 02.5 Customer satisfaction and estimated three percent from positive market level. Our interim targets for year-end 2024 02.6 Environmental management greenhouse gas (GHG) emission reductions developments. The normalized emission reduction focus on two of the highest emitting-industries: In 2021, Allianz released an update of its policy in the real economy. in 2021 is estimated at 16 percent and driven by Utilities, and Oil and Gas: on coal-based business models which defined 03 Strengthening active portfolio measures and emission reduction Utilities: Complementing our coal phase- in particular even more ambitious thresholds our foundation We strategically consider climate criteria in all our of investee companies. We also target that our from 2023 and a clear pathway to further reduce business lines. Our long-term commitment is to direct real estate portfolio will be aligned with out commitment by gradually increasing our thresholds in the future. In order to smooth the 04 Climate-related achieve net-zero GHG emissions in our proprietary science-based 1.5°C pathways by year-end 2024. investments in renewables and following at least transition to these stricter pathways, issuers which financial disclosure investment portfolio by 2050, in line with the the necessary annual growth rate of 5.85 percent are expected to potentially breach the new Target-Setting Protocol of the U.N.-convened Furthermore, in 2021 we have introduced as proposed by the International Renewable thresholds from 2023 were put on Freeze, which 05 Our universal principles Net-Zero Asset Owner Alliance (AOA). This means new targets for our equity and debt Energy Agency (IRENA). means, no exposure increase is allowed. This Freeze that, as asset owners, we will assist, incentivize infrastructure investments. Oil and Gas: Supporting the commitment set out affected € 0.2 billion public equity and € 3.4 billion and require our portfolio companies to embark These targets foresee: by the industry-led Oil and Gas Climate Initiative fixed-income exposure. Given this extensive Freeze, on decarbonization pathways consistent with the • Full transparency on financed emissions latest (OGCI) to limit the emissions intensity for Scope 1 there are no additional divestments reported 1.5°C objective of the Paris Agreement. As our by year-end 2023 for all investments. and 2 emissions of companies in their exploration for 2021. portfolio companies progress towards low-carbon and production business (‘upstream’) to less than For more information on our portfolio carbon business models, we will automatically see our • For direct equity investments an absolute 20 kg CO e per barrel of oil and aligning our Oil portfolio decarbonize. carbon reduction of 28 percent by year- 2 footprint, see our Climate-related financial end 2025. and Gas exposure on average listed equity and disclosure (section 04) and section 3.9.2 of the We use leading academic climate scenarios corporate bonds portfolio to this intensity level. Allianz ESG Integration Framework. like the ones used for the reports by the • New direct (equity and debt) investments Engaging with companies to set net-zero targets Intergovernmental Panel on Climate Change in high emitting assets only in case a 1.5°C on Scope 1 and 2 emissions by 2050. By 2025, (IPCC) to determine alignment with our goal. aligned decarbonization plan is in place. we aim for at least 50 percent of our assets under Targets are based on scenarios which foresee swift • Phase in of net-zero targets for new fund management in the oil and gas sector to have set emission reductions and project that the 1.5°C investments until year-end 2024. these targets. Similar to our own Scope 3 targets, goal is not, or is only slightly, overshot. They do the oil and gas industry also has a responsibility to not backload emissions reductions by assuming These portfolios make up around 36 percent reduce their Scope 3 emissions, which mainly are the world can massively remove carbon from of the global Allianz portfolio. For other asset the emissions resulting from the burning of oil and the atmosphere using technologies currently classes, the AOA is working to define methods unavailable or unproven at scale. on how to measure climate change-related 30