ESG Integration Framework Version 4.0 PUBLIC Prepared by Global Sustainability (March 16, 2021) Approved by the Group ESG Board (March 29, 2021) ESG Integration Framework Table of contents 01 Introduction 2 04 Human rights approach 39 01.1 Scope 3 04.1 Principles and standards 39 01.2 About this document 3 04.2 Governance 39 04.3 Integrating human rights due diligence in our business 02 Roles and responsibilities 4 activities 40 04.4 Integrating respect for human rights in our business 02.1 Group ESG Board 4 operations 41 02.2 Global Sustainability 4 04.5 Remedy and grievance mechanism 43 02.3 ESG Task Forces 5 02.4 Local ESG governance 5 05 ESG integration in Allianz operating entities 44 03 ESG approach 6 05.1 Allianz Global Corporate & Specialty SE 44 05.2 Allianz Investment Management SE 44 03.1 NGO dialogue 6 05.3 Allianz Real Estate 45 03.2 ESG in corporate standards and governance 6 05.4 Allianz Global Investors 45 03.3 ESG referral process in insurance and investment 8 05.5 Allianz Capital Partners 46 03.4 ESG sensitive business guidelines 9 05.6 PIMCO 46 03.5 Sensitive countries list 27 03.6 ESG scoring approach 28 06 External associations 48 03.7 Active ownership 30 03.8 Risk dialogues 32 06.1 Principles for Sustainable Insurance 48 03.9 Exclusion policies 32 06.2 Principles for Responsible Investment 48 03.10 Asset manager selection, mandating, monitoring and 06.3 UN-convened Net Zero Asset Owner Alliance 49 review 35 06.4 UN-convened Global Investors For Sustainable 03.11 ESG business opportunities 37 Development Alliance 49 06.5 Other memberships and commitments 50 A Appendix 51 A1 Abbreviations 51 A2 Document change log 52 1 ESG Integration Framework 01 Introduction As a global insurer, investor and asset manager, understanding Following an overview of ESG-related roles and responsibilities of environmental, social and governance (ESG) issues allows Allianz the key Group functions in section 02, the Statement gives a detailed to reduce risks and capture opportunities in underwriting, claims, overview of Allianz’s ESG approach (governance, policies, standards investment management and asset management. A focus on ESG and guidelines) in section 03. The goal of these sections is to provide issues supports Allianz’s core business and sustainability strategy and the reader with a detailed overview and understanding of how ensures living up to corporate values, demonstrating responsibility Allianz manages its ESG-related risks and opportunities through in decision-making and interactions with societal stakeholders. various governance processes. Section 04 provides our approach to managing human rights risks in our business and organization, By scrutinizing investments and insurance projects from an ESG referencing specific ESG-related processes, where applicable. perspective, Allianz extends its understanding of risks and seizes potential business opportunities for the benefit of its shareholders, Section 05 provides an overview of the ESG processes embedded its customers and other stakeholders. Holistic assessment of risk is within Allianz operating entities (OEs). This rounds-off the ESG especially relevant to Allianz as a manager and carrier of risks that integration description from previous sections, by describing how range from single events to decades as an insurance company. ESG is integrated at Allianz subsidiaries. ESG integration in insurance is carried out by all Allianz operating In the final part of the report (section 06), Allianz gives an overview entities and global lines, through group-wide ESG guidelines and of its membership in key external associations that promote the processes. Allianz integrates ESG factors into the investment of integration of ESG in the insurance and investment industries. proprietary assets1 and the management of third-party assets2. The investment of proprietary assets is steered by Allianz Investment Management SE (AIM), while third-party asset management is delivered by Allianz Asset Management (AAM) through its subsidiaries, Allianz Global Investors (AllianzGI) and the Pacific Investment Management Company (PIMCO). The updated version of Allianz ESG Integration Framework further increases transparency by outlining the Allianz approach to integrating environmental, social and corporate governance (ESG) considerations into the core business. Furthermore, this version of the Framework introduces our approach to managing human rights risks across our business and organization. 1 Proprietary assets include insurance investment portfolios, into which premiums collected from insurance customers flow. 2 Third-party assets on the other hand are invested on behalf of asset management 2 customers. ESG Integration Framework 01.1 Scope The processes and policies outlined in the Allianz ESG Integration Framework apply only to the insurance lines as well as the investment of proprietary assets of Allianz Group. ESG integration in third-party asset management is out of scope of this framework and governed by the respective entity’s policies and processes. 01.2 About this document The ESG Integration Framework is an important publication disclosing Allianz Group’s standards and policies regarding ESG business integration. Formal and binding corporate rules are published in the internal corporate rules book. While this publication provides details on Allianz’s ESG approach in insurance and investments, regular updates on KPIs, targets and achievements are published annually in the Group Sustainability Report and the Non-Financial Report1. All disclosures on corporate responsibility and ESG integration can be found on the Allianz Group website at www.allianz.com/sustainability. 3 1 The Non-Financial Report is part of the Group Annual Report. ESG Integration Framework 02 Roles and responsibilities This section outlines the key elements of the roles and responsibilities Key functions of the ESG Board include: of actors involved in the ESG governance of Allianz Group. • Strategically defining and continuously developing ESG ambition for the Allianz Group 02.1 Group ESG Board • Guiding the Group ESG approach and approving yearly ESG work-plan The Group ESG Board, established in 2012, is a dedicated body to • Defining and prioritizing ESG topics for the Group address environmental, social and governance (ESG) issues within • Regularly informing the Allianz SE Board of Management on Allianz. The Allianz SE Board of Management members in charge of ESG topics and activities • Investment Management & ESG (chairperson), • Positioning the Group towards critical ESG topics (in • Operations and IT, collaboration with relevant functions within Group • Insurance German Speaking Countries and Central & Eastern Communications and Corporate Responsibility) Europe, • Reviewing and recommending ESG-related policy proposals for • Asset Management, US Life Insurance, and consideration by the Board of Management and/or relevant • Global Insurance Lines & Anglo Markets, Reinsurance, Middle Board committees. East, Africa, • Engaging on ESG topics with relevant stakeholders, e.g. peers and business partners, NGOs. sit on the ESG Board. Further members are the Chief Sustainability Officer, Head of Group Communications and Responsibility, Head of Group Risk and the Head of Group Compliance. A range of senior 02.2 Global Sustainability executives and functional attendees , which vary according to topic, Global Sustainability is responsible for steering the integration support the ESG Board. of environmental, social and governance (ESG) aspects into core The Board is responsible for integrating and strengthening ESG investment and insurance activities. Global Sustainability is headed aspects within business segments and own operations of Allianz by a Chief Sustainability Officer and reports directly the Chairperson Group. insurance, investment and asset management activities. of the Group ESG Board. The Board further takes over responsibility for the oversight and Tasks of Global Sustainability with regard to ESG Business Integration steering of all sustainability matters, including next to ESG business include amongst others: integration, the Group-wider climate strategy and corporate citizenship topics. Integrating ESG in core lines of business of Allianz Group The ESG Board meets quarterly making recommendations on ESG • Preparing ESG integration strategies, policies, guidelines and topics for decision-making to the Allianz SE Board of Management rules for Allianz proprietary investments or its committees (for example Group Finance and Risk Committee). • Preparing ESG integration strategies, policies, guidelines and 4 rules for Allianz insurance segments ESG Integration Framework • Developing sector-specific ESG viewpoints and guiding criteria 02.3 ESG Task Forces for involvement in sectors considered sensitive, based on internationally recognized standards and guidelines, input Addressing sustainability matters requires cross-functional from non-governmental organizations (NGOs) as well as collaboration and support that spans our global operations. external research Allianz has established dedicated ESG Task Forces (see the Group • Coordinating and supporting further implementation of Sustainability Report for an overview of the Task Forces) to integrate relevant membership commitments, such as Principle for sustainability matters across the core processes in the organization. Responsible Investment (PRI) and Principles for Sustainable Task Forces are led by senior executives and staffed with team Insurance