AllianzGI strengthens its sustainable approach with reinforced standards and a KPI-based methodology at the portfolio level
16.05.2023 | With the publication of its annual Sustainable Report, Allianz Global Investors announced a reinforced standard for categorising its sustainable funds. The methodology builds upon the Sustainable Finance Disclosure Regulation (SFDR) and its respective category of “Article 8 funds”, but goes beyond this standard. “Investors are rightly seeing the European Union’s SFDR Art. 8 as a minimum commitment for sustainable funds, however, a “minimum” is not good enough,” said Matt Christensen, Global Head of Sustainable and Impact investing at AllianzGI. “We do not accept this as true to label, so we introduced the principle of ‘Two binding elements’ for our sustainable funds range.”
The first binding element, AllianzGI’s sustainable minimum exclusion policy, enforces exclusions criteria for portfolio construction related to weapons, coal, international norms and standards (including the UNGC1), and tobacco, which would already suffice for the Art. 8 category. In order to more meaningfully connect sustainability to the product strategy, AllianzGI introduced a second binding element that needs to be incorporated into a fund’s investment process. These can be SRI best-in-class, SDG alignment, Impact strategies or a new KPI (key performance indicator) approach.
This new KPI approach considers and addresses environmental and/or social challenges within the portfolio construction process by defining sustainability as a KPI objective that must be met at portfolio level. With this new approach, AllianzGI targets measurable, monitored and reported indicators to track ESG results that are significant enough to drive sustainability in the investment process of a portfolio. This approach was made possible by the launch of AllianzGI’s proprietary sustainability data platform earlier this year, the Sustainability Insights Engine (SusIE). SusIE is a web-based user interface using state-of-the-art technology to mainstream access to ESG data2.
The first KPI launched is on carbon reduction. It is based on Greenhouse gas intensity (CO2 equivalent (scope1 and 2) compared to revenues). The targets are either a minimum lower portfolio GHG3 intensity vs benchmark, or a minimum 5% year-over-year portfolio GHG intensity reduction. AllianzGI plans to further evolve the list of available KPIs and extend them to other products.
Christensen added: “With this approach, we are in a position to actively manage the GHG intensity of portfolios, and contribute to shape the pathway to a low emission future. This goes hand in hand with our stewardship activities, where we use our influence as shareholder in the long term interest of our clients. We increasingly make our clients’ voice heard when it comes to a company’s thoroughness in sustainability.” Christensen said AllianzGI purposefully drives engagement with companies more towards sustainability aspects. Typical topics for this critical dialogue is for example the “say on climate” initiative, where shareholders demand that climate strategies are presented and discussed at annual shareholder meetings or the integration of sustainability criteria in the remuneration system of the management..
The full Sustainability Report including many details on the Stewardship as exercised by AllianzGI can be found here:
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About Allianz Global Investors
Allianz Global Investors is a leading active asset manager, managing EUR 514 billion* in assets for individuals, families and institutions worldwide. By being active and investing for the long term, our goal is to elevate the investment experience for our clients and generate value every step of the way.
* Data as of 31 March 2023. Total assets under management are assets or securities portfolios, valued at current market value, for which Allianz Asset Management companies are responsible vis-á-vis clients for providing discretionary investment management decisions and portfolio management, either directly or via a sub-advisor. This excludes assets for which Allianz Asset Management companies are primarily responsible for administrative services only. Assets under management are managed on behalf of third parties as well as on behalf of the Allianz Group.
1 United Nations Global Compact
3 Greenhouse Gas
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