Integrating Environmental, Social and Governance criteria (ESG) across the entire investment value chain.
Our ESG approach
At AllianzGI, we engage in an on-going, forward thinking dialogue with every client. Alongside an active approach to investment and active engagement with our clients, we are active stewards of the assets we own.
Acting upon our fiduciary role as a responsible asset manager we aim to incorporate Environmental, Social and Governance (ESG) criteria throughout our entire investment value chain. Given the diversity of investors’ objectives and requirements we provide tailored ESG and SRI processes with a broad range of approaches, adaptable to different levels of ESG incorporation and client preferences, enhancing our clients’ investment decisions whilst helping create benefits for society as a whole.
AllianzGI has been a signatory to the United Nations Principles for Responsible Investment (UN PRI) since 2007.
There are nearly 2,000 signatories to the UN Principles for Responsible Investment (UN PRI),1 representing almost USD 90 trillion in assets under management. Such collective muscle would suggest that consideration of environmental, social and governance (ESG) factors has become a primary concern for asset managers and asset owners in their investment decisions.
Yet, the global growth of interest in ESG since AllianzGI signed up to the UN PRI in 2007 has coincided with an increase in investor expectations and product categories, which seek to address different philosophical
positions and client requirements. Consequently, we believe it is important to be clear about what we offer and what we mean when labelling our offering.
Responsible Investing Report 2018
The report outlines our ESG activities and research, our engagement with investee companies through stewardship, the integration of ESG across our investment strategies and our innovative approach to meeting clients’ evolving extra-financial demands.
As an active investor, research is core to our ability to generate returns. We have been able to demonstrate that ESG research can provide an important signal for future performance. Thus, we have an active programme of engagement and stewardship and our proprietary ESG research is available to all investors across AllianzGI. As a baseline, we can say that all our investments are ESG informed.
While many firms talk about integrating ESG, we have taken a very rigorous approach in our “Integrated ESG” labelling. Each portfolio team is responsible for questioning potential holdings with low ESG ratings and contributing to the firm’s “digital debate” about companies’ ESG risks. This internal crowdsourcing ensures that experienced portfolio managers and industry analysts are contributing views on ESG risk, which we believe is superior to relying entirely on external ESG ratings and buying in to third party methodologies and judgements.
When a portfolio team still sees a compelling opportunity to invest in a company, despite the acknowledged ESG risk, they must document their risk/return thinking in our collaboration system. Because our portfolio managers understand ESG risk and also have the ability to own risky ESG companies, we’re in a unique position to engage with the companies that need it most, as we seek to see that risk reduced through change. In this way, we are committed to, and in the process of, embedding ESG as a tangible factor across all of our strategies regardless of asset class. Already, Integrated ESG applies to EUR 116 billion of the assets we manage.
One of the strengths of Integrated SG is that it builds an additional factor into existing investment processes: enhancing rather than changing the process. Yet we recognise that for a number of clients, ESG is more than a risk-based investment factor.
Through our experience in Socially Responsible Investing (SRI), we are well equipped to provide investment solutions that address clients’ extra financial needs – whether that is through the application of negative screening, or increasingly through positive screening and creating an impact. In addition to EUR 22 billion in SRI strategies, AllianzGI is managing around EUR 6 billion of impact investments. We are committed to meeting growing client demand in this area through insights and innovation.
The purpose of this report is to provide an update on: areas of ESG research we are focused on; our engagement with investee companies and how we are fulfilling our stewardship role; how we are integrating ESG across our investment strategies; and the ways we are innovating to meet clients’ evolving extra-financial demands.
Whether it is through integrating ESG into investment strategies, offering best-in-class SRI strategies or developing strategies that aim to fulfil an explicit extra-financial purpose to generate an intentional impact, we have built a culture of collaboration and active interaction among our investors around the globe. In so doing, and through an ongoing focus on this subject, we hope to unlock the potential of ESG and serve a spectrum of client demands.
We hope you will join us on this journey.
Chief Executive Officer and Global Chief Investment Officer