We are pleased to introduce The Investment Intelligence Podcast, where experts discuss all things investing, from recent market developments, to strategy, sustainable investing, asset allocation, risk management and more.
In the past two years, we have multiplied the assets we manage in sustainable investment strategies to EUR 165 billion. And, through collaboration, we work to ensure that material ESG risk considerations are top of mind for all our portfolio managers.
Active is: Fostering a low-carbon economy
"While the coronavirus outbreak will likely weigh on the economic outlook for some time, we should draw hope from the unprecedented global solidarity shown during this crisis. A similar international effort will be critical in preventing global warming and facilitating the transition to a carbon-neutral economy."
Tobias Pross, CEO
Active is: Allianz Global Investors
In 2019, our engagement activities spanned 333 companies in 28 markets. In total, we conducted 448 engagements – up 31% on 2018 – and addressed climate and environmental risks with 82 companies.
We started our sustainable investing journey 20 years ago and were early to sign the United Nations Principles for Responsible Investment (UN PRI) in 2007. We believe that sustainable investing can generate positive performance not just for our clients, but for the community at large.
We aim to integrate environmental, social and governance (ESG) factors throughout our entire investment value chain to better manage risk and generate sustainable, long-term returns. Given the diversity of investors’ objectives and requirements we provide sustainable investing processes with a broad range of approaches, adaptable to different levels of ESG incorporation and client preferences. These enhance our clients’ investment decisions while helping create benefits for society as a whole.
Sustainable investing is in our DNA
Data as at 31 December 2019, AuM as at 30 June 2020
As an active investor, research is core to our ability to generate returns. We have been able to demonstrate that ESG research can be an important indicator of future performance. We have an active programme of engagement and stewardship and our proprietary ESG research is available to all investors across AllianzGI.
Sustainable investing for AllianzGI includes four broad categories: Integrated ESG, Sustainable, SDG-aligned and Impact Investing.
Our approach to sustainable investing
As an active investor, research is core to our ability to generate returns. We have been able to demonstrate that ESG research can be an important indicator of future performance. We have an active programme of engagement and stewardship and our proprietary ESG research is available to all investors across AllianzGI. We can say that all our investments are ESG-informed.
Sustainable Investing for AllianzGI includes three broad strategies: Integrated ESG, SRI and Impact Investing.
Integrated ESG corresponds to active ESG risk management aimed at better financial returns. Within this approach we integrate financially material ESG factors into investment analysis and decision making in a systematic and disciplined way, without constraining the investment universe.
How it works: While many firms talk about integrating ESG, we have taken a rigorous approach in our “Integrated ESG” labelling. Each portfolio team is responsible for questioning any 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 contribute their views on ESG risk. We believe this approach is better than 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 an acknowledged ESG risk, they must document their risk/return thinking in our collaborative system. Because our portfolio managers understand ESG risk and also have the ability to own companies with high ESG risks, we’re in a unique position to engage with those companies that need it most, as we seek to reduce that risk through change. One of the strengths of Integrated ESG is that it builds an additional factor into existing investment processes: enhancing rather than changing the process. In this way, we are committed to, and in the process of, embedding ESG factors tangibly across all of our strategies regardless of asset class.
Our Sustainable strategies aim to create portfolios appealing to clients who want their investments to not only generate financial value but also to reflect their own values. We achieve this by combining financial and sustainability assessments in investment analysis and portfolio construction.
All portfolios within this offering apply minimum exclusion criteria in addition to either Climate Engagement with Outcome or SRI Best-in-Class considerations.
Portfolios applying Climate Engagement with Outcome combine exclusions and engagement with the aim to encourage companies on their climate pathway. Engagement targets are defined by peer comparison and realistic climate ambitions per sector and are tracked over time
Portfolios applying SRI Best-in-Class focus on portfolio construction geared towards a superior ESG quality through minimum exclusion criteria and positive screening. Both, financially material and non-material ESG factors are part of the analysis.
The 17 global SDGs were set by the UN General Assembly in 2015 as a way of achieving a better and more sustainable future by 2030. Large capital investments are crucial to meeting the targets detailed under SDGs.
Investors are beginning to realise that they have the power to make an impact by choosing where and how to invest their funds. Investing with sustainability goals in mind allows investors to influence the way the economy works or how a company behaves through the allocation of capital. It can drive innovation by channelling money towards new technologies, reinforce positive behaviour by rewarding good practices and impact the entire economic value chain. Furthermore, designated strategies can make investments with a specific goal in mind, such as addressing the need for clean water or curbing carbon emissions.
AllianzGI has developed a framework for SDG-aligned investing to provide a clearer proposition for clients who want their investments to contribute to a better world, in addition to generating financial returns.
At AllianzGI, we aim to enable our clients to maximise their exposure to positive environmental and social outcomes by offering a choice of impact investing strategies across asset classes. AllianzGI offers listed (green bonds) and private market impact investing strategies. Both have the clear intention of generating societal benefits that are aligned with the UN Sustainable Development Goals (SDGs). In order to qualify for an impact investing strategy, an investment must focus on addressing pressing environmental and social issues, with the UN SDGs used as a recognised credible international framework.
AllianzGI’s Impact investment strategies are defined by three core beliefs:
Intention: The intention of a strategy and its investments is to generate incremental positive social and/or environmental value while delivering financial returns.
Association: There is a clear association between each investment and the positive output delivered.
Measurement & report: The impact will be measured on a best efforts basis and reported in order to validate each specific strategy.
AUM data as at 30 June 2020. Source: Allianz Global Investors. Any differences in totals are due to rounding. Impact comprises different strategies targeting climate transition, environmental projects and renewable energy. Environmental, social and governance (ESG); Sustainable & responsible investing (SRI); Dow Jones Sustainability Index (DJSI); Principles for responsible investing (PRI). Sustainability leadership and inclusion in the DJSI are based on the research of and an evaluation of questionnaires submitted to RobecoSAM. The PRI assessment report is based on
information reported directly by signatories. Moreover, the underlying information has not been audited by the PRI or any other party acting on its behalf.
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