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Allianz SE

PRI reporting framework 2019

You are in Strategy and Governance » Investment policy

Investment policy

SG 01. RI policy and coverage (Private)


SG 01 CC. Climate risk

01.6 CC. Indicate the climate-related risks and opportunities that have been identified and factored into the investment strategies and products, within the organisation's investment time horizon.

We believe that climate change will materially affect economies and therefore our lines of business. Arising risks and opportunities can be seen already today and will grow over mid- and long-term. These can for instance be acute and chronic physical impacts on property or human health like warming temperatures, extreme weather events, rising sea levels, intensifying heatwaves and droughts or a change in vector-borne diseases. Further risks and opportunities result from the cross-sectoral structural change stemming from the transition towards a low-carbon economy; this includes changes in climate policy, technology, or market sentiment, and impacts thereof on the market value of financial assets, as well as risks resulting from climate change liability.

Allianz Group is exposed to a variety of risks. The largest general risks in terms of their contribution to Allianz’s risk profile are market risk, especially equity risk, credit and credit spread risks driven by assets backing long-term liabilities; furthermore Property-Casualty premium and reserve risks resulting from natural and man-made catastrophes as well as from claims uncertainty.

Climate change impacts our business mainly in two ways: through insurance policies, e.g. covering property damage, health impacts and other losses, as well as changes in sectors and business models we underwrite. Furthermore, we are affected as a large-scale institutional investor with significant stakes in various economies, companies, infrastructure, and real estate that are or will be affected by the physical impacts from climate change and by the transition to a low-carbon economy which can have direct impacts on the ability of assets to generate long-term value.

As a landmark outcome of the incorporation of climate-related risk and opportunity assessments into our business strategy, we committed in 2018 to set ourselves long-term emissions reduction targets for our proprietary investment portfolio and for our business operations. For more information on the commitmemnt as well as on early steps in enabling the low-carbon transition and to managing transition risks connected with climate change, see answer to SG 01.10 CC.

We strategically invest in low-carbon assets since more than a decade. This includes renewable energy, certified green buildings, and green bonds. We also increased our exposure to dedicated low-carbon assets like renewable energy and green buildings.

From an opportunity perspective, Allianz is a pioneer in insuring low-carbon technologies. We provide standardized and tailor-made insurance products as part of our Sustainable Solutions approach and are insuring renewables in more than 70 countries.
 
In 2018 we also made significant progress on seizing climate-related insurance opportunities by scaling our renewable energy insurance services to fast-developing growth markets through our initiative “Scaling Up Renewable Energy (SURE)”.

While working to combat global warming and climate change, we also aim to reduce the impacts of climate risks, by incentivizing preventive measures to increase customers’ resilience, and compensating for climate-related damages. Examples include Risk Consulting services offered by AGCS, our active support of the InsuResilience Global Partnership, or our work with the German Corporation for International Corporation (GIZ) to pilot innovative insurance solutions in emerging and developing countries.

01.7 CC. Indicate whether the organisation has assessed the likelihood and impact of these climate risks?

01.8 CC. Indicate the associated timescales linked to these risks and opportunities.

Allianz assesses the potential impact of different climate scenarios with time horizon up to 2040 on the business, e.g. on performance of infrastructure assets and investments into renewables, development of SBTi pathways for business up until 2040 and complete decarbonization, or development of coal phase-out pathway for complete phase-out of coal risks by 2040.

Timescales and horizons naturally differ depending on specific line of business under consideration.

01.9 CC. Indicate whether the organisation publicly supports the TCFD?

01.10 CC. Indicate whether there is an organisation-wide strategy in place to identify and manage material climate-related risks and opportunities.

Describe

The identification and management of climate-related risks and opportunities are part of our overall business strategy. Measures we take include: developing and adjusting financial products and services; improving decision-making, policies and processes; the setting of targets; managing our operational climate footprint; as well as engaging with internal and external stakeholders.

Our business strategy includes systematically leveraging opportunities for financing a low-carbon and climate-resilient future, e.g. by investing in renewable energy, energy efficiency in real estate or electric vehicle infrastructure, or by providing insurance solutions for physical climate impacts and low-carbon business models. For our proprietary investments, the ESG Functional Rule for Investments provides the foundation of integrating climate-related issues. It comprises Asset Manager selection and systematic integration of climate and ESG factors into our investment decisions.

As a landmark outcome of the incorporation of climate-related risk and opportunity assessments into our business strategy, we committed in 2018 to set ourselves long-term emissions reduction targets for our proprietary investment portfolio and for our business operations. To this end, we joined the Science Based Target initiative in May 2018.

Our targets will be in line with latest climate science to support the Paris Climate Agreement’s target of limiting global warming to <2°C. To this end, all tradable proprietary investments are to be structured climate-neutral by 2050. We conduct detailed analysis in particularly energy-intensive sectors on emission profiles, possible proto-decarbonization pathways, and necessary technology shifts. The results are used for portfolio carbon analysis, definition of decarbonization pathways, corporate engagement as well as management decisions.

As an early step in enabling the low-carbon transition and managing transition risks connected with climate change, we announced in 2015 to no longer invest proprietary assets in coal-based business models. See SG 14.5 for further information on our coal exclusion.

Furthermore, we announced in May 2018 that we will no longer provide P&C insurance to single-site coal power plants or coal mines, being operated or planned – effective immediately. Also for our P&C insurance portfolios we are committed to completely phase-out all coal-based risks by 2040 the latest and are further developing our approach to reach this target.

We have designed an engagement approach and a dedicated engagement function at Allianz Investment Management besides the Group ESG Office to create an impact in the real economy and encourage companies to define and implement climate strategies in line with science. By actively engaging with companies to have them set measurable climate targets that are transparently pursued, for example by joining the SBTi, we aim to not only reduce carbon emissions in our portfolio but also in the real world.

Additionally, we plan to join forces with other asset owners in encouraging companies to implement such pathways. Our participation in the Transition Pathway Initiative, Climate Action 100+ as well as in the Portfolio Decarbonization Coalition and PRI connects us with like-minded investors and offers platforms for collaborative engagement.

For details on the use of climate-related scenario analysis to inform our investment and insurance strategy, see SG 13.4 CC.

1.12 CC. Indicate the documents and/or communications the organisation uses to publish TCFD disclosures.

specify

          Allianz Sustainability Report & Allianz.com website section on Sustainability
        

SG 02. Publicly available RI policy or guidance documents

New selection options have been added to this indicator. Please review your prefilled responses carefully.

02.1. Indicate which of your investment policy documents (if any) are publicly available. Provide a URL and an attachment of the document.

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02.2. Indicate if any of your investment policy components are publicly available. Provide URL and an attachment of the document.

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02.3. Additional information [Optional].

Allianz first published the Allianz ESG Integration Framework in July 2016; the revised third edition was published in October 2018. The Framework provides a summary of all ESG integration efforts, including details on policies and guidelines across Allianz Group.

The updated Framework provides additional details on

  • the ESG engagement approach, and
  • the Allianz aproach to managing coal-based business models in investments and insurance.

Allianz has a Climate Change Strategy in place since 2005, which is regularly updated (last in 2017). The strategy lays out how we anticipate the risks of a changing climate for our business, how we care for the climate-vulnerable, and how we enable the low-carbon transition.

Please also see new developments in our approach to dealing with coal-based business models:
https://www.allianz.com/content/dam/onemarketing/azcom/Allianz_com/responsibility/documents/Allianz-Statement-coal-based-business-models.pdf


SG 03. Conflicts of interest

03.1. Indicate if your organisation has a policy on managing potential conflicts of interest in the investment process.

03.2. Describe your policy on managing potential conflicts of interest in the investment process.

All Allianz employees are bound by the requirements of the Allianz Group Code of Conduct, which includes specific provisions and processes regarding the management of conflicts of interest.

The Code of Conduct can be downloaded from the Allianz Group website:
https://www.allianz.com/en/about_us/management/corporate-governance/code-of-conduct/

03.3. Additional information. [Optional]


SG 04. Identifying incidents occurring within portfolios (Private)


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