How we invest

Sustainable Investment

Investment management is an integral part of the insurance business, as the premiums of Allianz clients are invested to meet long-term liabilities. Allianz’s worldwide investment activities comprise assets of over EUR 750 billion across a range of asset classes, sectors and countries. As a result, Allianz is directly and indirectly connected with other businesses, sectors and economies, and is therefore an integral part of the global economy.

AllianzGI PME as part of AllianzGI's private markets pillar strives to invest sustainably across our three asset classes. In order to keep up with our ambition, we incorporate Environmental, Social and Governance (ESG) factors into our investment processes, for example through our exclusion policy, research, corporate and country analysis, monitoring and risk management. We firmly believe that considering ESG factors in investment management is not a short-term trend, but will change the business.

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AllianzGI PME is committed to the United Nations Principles for Responsible Investment (UN PRI). Our parent company, Allianz Global Investors, is a signatory to the UN PRI, and so in addition to integrating ESG principles in our investment process, we also incorporate these into our ownership policies and practices and aim for appropriate disclosure on ESG issues by the entities in which we invest. Moreover, we strive to enhance the implementation effectiveness of the principles and regularly report on our activities and progress of implementation. Our commitment covers all assets we invest in.

Allianz ESG Approach

AGI Private Markets Direct Equity Infrastructure adopts a “sustainability-focused” strategy whereby sustainability considerations are integrated both into investment decisions and asset management processes. We integrate assessment of sustainability risks into our investment analysis and asset management decision-making in a systematic and disciplined way through (i) the rigorous screening of new investments; and (ii) the close stewardship and monitoring of assets in our investment portfolio.

What does a sustainability-focused approach mean for us?

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Prioritising ESG due diligence

We take a rigorous and disciplined approach to vetting new investments that involves (i) identifying sustainability risks and their mitigants in the short, medium and long term; (ii) assessing the likely impacts of sustainability risks on the returns of investments; and (iii) addressing sustainability risks upfront with the seller and / or the target company’s management team and working with other shareholders and co-investors to ensure a unified ESG approach

Driving ESG improvements

We take an active approach to investing; through our board positions and our regular engagement with portfolio companies we seek to push for improvements and introduce new ESG initiatives which include mitigating sustainability risks.

Enabling the climate transition

We generally pursue a long-term buy-and-hold strategy. Our long-term objective is to assist our portfolio companies in transitioning to net-zero greenhouse gas (“GHG”) emissions by 2050, helping them to navigate the challenges faced in their transition to a sustainable economy. In the shorter-term this requires us to take our portfolio companies on a journey to ensure that ESG considerations are embedded within their business cultures.

How is our sustainability-focused approach implemented?

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By adopting a unified ESG approach pre- and post-investment:

Our standardised processes which combined with the dual function of team members making and managing investments ensure that ESG issues and sustainability risks are captured, monitored and mitigated at the pre-investment stage and during ownership with full accountability for delivery of ESG expectations.

In having knowledgeable ESG champions:

Specific tasked ESG champions update existing ESG processes and work with the AllianzGI Sustainability team, Allianz SE Global Sustainability office and external advisors to develop and implement new ESG workstreams. This knowledge is disseminated to all team members enabling ESG requirements to be seamlessly integrated into the investment and asset management processes.

By ensuring that ESG due diligence is prioritised:

ESG compliance is a gating item in our first review of a potential investment. We then examine the impact of ESG factors and sustainability risks across all due diligence workstreams when reviewing that investment, for example how quickly a company can adapt to a net-zero economy and to what extent it is prepared for this transition. If we are not satisfied with the company’s ESG profile or approach at any stage of the process, we may turn down an investment opportunity. However, since we are also keen to help companies improve their sustainability performance, we may on occasion make our investment conditional upon the commitment to improve ESG practices.

By actively managing our assets thereby ensuring ESG topics continue to be prioritised:

As an equity investor that invests significant sums and takes a position of influence at the board level of our assets to protect our investment, we can steer our portfolio companies towards better ESG practices in a number of ways, for example:

withholding consent on decisions that may have negative ESG consequences;
prioritising ESG topics at the board level of each portfolio company;
improving existing ESG reporting and accountability;
developing, testing and implementing new ESG strategies;
engaging with, and incentivising, management teams to require that company performance meets long-term sustainability targets;
assessing current and future sustainability risks and mitigants;
identifying, encouraging and funding ESG-related projects and initiatives within our portfolio companies; and
lobbying other shareholders and stakeholders (such as regulatory bodies) to adopt a similar approach.

Shared Service Platform – facilitating success

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Finance

The finance department comprises various teams. The Investment Controlling & Risk Management provides monitoring, performance analysis and action recommendation. The team manages the valuation process and is responsible for investment accounting for the renewables business line. Transaction & Reporting Services provide the accounting assessment for proposed deals and coordinates the investment decision processes. The department manages the onboarding process of new investments, and is responsible for accounts management and the investment planning process. A centralized reporting team regularly carries out individual reporting for all AllianzGI PME asset classes.

HR

AllianzGI PME HR provides management, leaders and employees with principles, tools and supports in areas such as Employer Branding & Recruitment, Talent Development & Performance Management, Compensation & Rewards, Employee Engagement, HR Operations & Reporting.

Legal

AllianzGI PME Legal is closely involved in the entire investment process from initiation to closing. This includes the negotiation of transaction documents, legal due diligence and regulatory advice for the transaction structuring. The team also gives legal advice for the portfolio management, handles all corporate matters and takes on AllianzGI PME's compliance function.