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.