Sustainability Report 2021 04.3 Strategy 01 Introduction Since 2005, the Allianz Group 04.3.1 Our Climate Risks and opportunities also result from the • As a large-scale institutional investor with Climate Change Strategy Change Strategy cross-sectoral structural change stemming significant stakes in various economies, 02 Measuring and from the transition to a low-carbon economy. companies, infrastructure and real estate that managing sustainability has encouraged solutions for The strategy focuses on three areas: Anticipating These transition risks include the impacts of might be affected by the physical impact of the risks of a changing climate; Caring for the changes in climate policy, technology and market climate change and the transition to a low- 03 Strengthening tomorrow’s climate. It steers climate-vulnerable; and Enabling the low-carbon sentiment, and impact thereof on the market carbon economy. our foundation the uptake of climate-related transition. These strategy pillars are described in value of financial assets, as well as impact The largest risks in our risk profile are market risks, risks and opportunities in our chapter 01.5.3 of this report. resulting from climate change litigation. especially equity risk, credit and credit spread 04 Climate-related Impact on our business and impact of risks driven by assets backing long-term liabilities. financial disclosure insurance and investment 04.3.2 Climate-related P&C premium and reserve risks, resulting from 04.1 Highlights risks and opportunities our business natural and man-made catastrophes and from 04.2 Governance business. Regularly updated, Allianz Group is exposed to risks that are claims, uncertainty must be considered. 04.3 Strategy it is overseen by the Climate change will materially affect global influenced by climate change in a multitude 04.4 Strategy resilience, stress-tests and economies and Allianz’s lines of business. The risks of ways. We are particularly impacted in two climate scenario analysis Sustainability Board. and opportunities emerging today will increase key ways through our core business activities, 04.5 Risk and opportunity management over the mid- and long-term. They include acute both of which can influence the ability of assets 04.6 Targets and metrics Our 2021 materiality assessment confirmed the and chronic physical impacts on property and to generate long-term value: results of 2019 in finding climate change to be human health such as warming temperatures, 05 Our universal principles Allianz’s top sustainability topic according to extreme weather events, rising sea levels, • As an insurer providing insurance policies, e.g. stakeholder views on the importance of topics to intensifying heatwaves, droughts and potential covering health impacts, property damage or our business and to society. See section 05.2 for changes in vector-borne diseases. litigation claims, and through changes in the more details on the materiality assessment. sectors and business models we underwrite. Risk category Climate-related changes Acute First-order hazard/risk Second-order risk Like extreme weather, heat stress, etc. Like soil moisture deficit, coastal erosion etc. Physical Chronic First-order hazard/risk Like changing temperature patterns or rising sea levels, etc. Policy and legal Transition Technology Market Reputation Litigation for (enabling) GHG/emissions/ Litigation failure to mitigate, etc. Litigation for insufficient disclosure, adaptation, etc. 69