Allianz Global Investors announced a reinforcement of the criteria used to classify its sustainable funds with the publication of its annual Sustainability and Corporate Stewardship Report. The methodology is based on the Sustainable Finance Disclosure Regulation (SFDR) and its respective category “Article 8 Funds”, But it goes beyond this standard.
“Investors rightly view the EU’s SFDR Art. 8 as a minimum commitment for sustainable funds, although ‘minimum’ is not sufficient,” Said Matt Christensen, Global Head of Sustainable and Impact Investing at AllianzGI, “To provide greater clarity, we have introduced the ‘two bond’ principle for the limit on our permanent funds.”
The first binding element, its policy of sustainable exclusion, applies exclusion criteria to a portfolio of securities related to arms, coal, tobacco, or violations of international standards (including the principles of the United Nations Global Compact), which in turn are themselves part of Art. would be sufficient to include. 8. Going a step further, Allianz GI has introduced a second binding element that must be included in the investment process. This could be a ‘best-in-class’ portfolio following SRI norms, alignment with SDGs, impact strategies or a fresh approach focused on Key Performance Indicators (KPIs) in the context of sustainability.
This new KPI approach considers and addresses environmental and/or social challenges within the portfolio construction process, defining sustainability as a KPI goal to be met by the fund. With this new approach, Allianz GI sets measurable, monitored and reported indicators to track ESG outcomes that are critical to driving sustainability in the portfolio’s investment process. This vision is made possible by the launch of Allianz GI’s sustainability data platform, the Sustainability Insights Engine (SusIE), earlier this year. SusIE is a web-based user interface that uses state-of-the-art technology to make ESG data easy to access.
The first KPI refers to the reduction of carbon emissions. It is based on GHG intensity (Scope 1 and 2 CO2 equivalent compared to revenue). The objective is to achieve a minimum reduction in the GHG intensity of the portfolio relative to the benchmark or a minimum reduction of 5% per annum in the GHG intensity of the portfolio. Allianz GI plans to further develop the list of available KPIs and expand them to other products.
Christensen says: “With this approach, we are in a position to actively manage the GHG intensity of the portfolio and help shape the path to a low-emissions future. We use our influence as a shareholder in the long-term interest of C. We are increasingly making our customers’ voices heard when it comes to a company’s sustainability approach.
Christensen also claims the same Allianz GI intentionally steers its program of active dialogue with companies around sustainability or ESG aspects. Specific topics of this important dialogue are, for example, the integration of sustainability criteria into the management remuneration system, or the initiative “Say It On The Climate”In which shareholders demand that climate strategies be presented and discussed at annual shareholders’ meetings.