Allianz Global Investors

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1 Allianz Global Investors Klimatanpassning Sverige 2017 Stefan Hilton 7 september 2017

2 1 Allianz Global Investors - who we are! 2

3 Allianz Global Investors who we are and what we do! Source: Allianz Global Investors, For illustrative purposes only. 3

4 AllianzGI is a pioneer in ESG investing First Allianz Norms/ Values based strategy launched First Allianz Impact strategies launched First Allianz ESG Integrated Strategies to be launched First Allianz Global SRI Equity strategy launched First Allianz SRI Fixed Income strategy launched First Multi Asset SRI strategy launched Source: Allianz Global Investors, For illustrative purposes only. 4

5 Deep commitment to proprietary research Collaboration of portfolio managers, analysts and traders - facilitated via Chatter, our social enterprise network One global investment platform linked by shared research and trading Sharing insights globally creates an information advantage, helping to generate outperformance for our clients Grassroots SM Research is a division of Allianz Global Investors that commissions investigative market research for asset-management professionals.. Data used to generate Grassroots SM Research recommendations is received from reporters and field force investigators who work as independent contractors for broker-dealers. Those broker-dealers supply research to AllianzGI and certain of its affiliates that is paid for by commissions generated by orders executed on behalf of AllianzGI s clients. 5

6 2 Is there an environmental focus in the investment industry? 6

7 ESG risks moving to the top of the agenda Top 5 Global Risks in Terms of Impact according to World Economic Forum surveys st Asset price collapse Asset price collapse Asset price collapse Asset price collapse Fiscal crises Major systemic financial failure Major systemic financial failure Fiscal crises Water crises Failure of climate change mitigation and adaption Weapons of mass destruction 2 nd Retrenchment from globalisation Retrenchment from globalisation (developed) Retrenchment from globalization (developed) Retrenchment from globalization (developed) Climate change Water supply crises Water supply crises Climate change Rapid and massive spread of infectious diseases Weapons of mass destruction Extreme weather events 3 rd Interstate and civil wars Slowing Chinese economy (<5%) Oil and gas price spike Oil and gas price spike Geopolitical conflict Food shortage crises Chronic fiscal imbalances Water crises Weapons of mass destruction Water crises Water crises 4 th Pandemics Oil and gas price spike Chronic disease Chronic disease Fiscal crises Chronic fiscal imbalances Diffusion of weapons of mass destruction Unemployment and underemployment Interstate conflict with regional consequences Large-scale Involuntary migration Major natural disasters 5 th Oil price shock Pandemies Fiscal crises Fiscal crises Extreme energy price volatility Extreme volatility in energy and agriculture prices Failure of climate change adaption Critical information infrastructure breakdown Failure of climate change adaption Severe energy price shock Failure of climate change mitigation and adaption Economic Environmental Geopolitical Social Technological Source: World Economic Forum 2017, The Global Risks Report 2017, 12th edition, p.4. Global risks may not be strictly comparable across years, as definitions and the set of global risks have evolved with new issues emerging on the 10-year horizon. For example, cyberattacks, income disparity and unemployment entered the set of global risks in Some global risks were reclassified: water crises and rising income disparity were re-categorized first as societal risks and then as a trend in the 2015 and 2016 Global Risks Reports, respectively. The 2006 edition of the Global Risks Report did not have a risks landscape. 7

8 Green Bond issues boomed after corporates entered the market Labelled green bond issuance (USD bn) Corporate, muni, and commercial bank bonds make up a growing proportion of issuance 2017 : New Green Bond issuances to come, notably from governments Increased standardization and regulation across the world Incentives still needed, especially directed towards industrial activities Source: Climate Bonds Initiative, data as of 19/06/2017 This is for guidance only and not indicative of future allocation. 8

9 Green Bond market Diversification of issuer type and use of proceeds The weight of development banks is decreasing to the benefit of Corporates and Sovereign issuers Source: Allianz Global Investors, Climate Bonds Initiative, data as of 19/06/2017 9

10 Global ESG ratings The challenges and opportunities North America Europe Japan 2,63 2,21 2,19 3,50 3,04 2,91 2,88 3,40 2,40 2,60 2,11 2,29 Overall Environment Social Governance Overall Environment Social Governance Overall Environment Social Governance Asia Pacific ex Japan Latin America Africa/Middle East 2,49 2,25 2,18 2,95 2,73 2,59 2,47 2,79 2,72 2,49 2,47 3,24 Overall Environment Social Governance Overall Environment Social Governance Overall Environment Social Governance Green bars = global average Source: AllianzGI prop. ESG data, as at 30 June

11 3 Global Sustainability - Risks, Opportunities, & Impact within investments 11

12 ESG analysis identifies risks and serves as early warning signal Anticipation and assessment of material ESG risks: spot early, evaluate and monitor Example: ESG tail risk analysis** Intrinsic ESG Ratings Price Intrinsic ESG override MSCI ESG risk scores for >6,000 corporate issuers* Stock specific ESG risk signal ESG risk: Low Medium Critical Global Research Platform t Research Platform * Environmental Pillar Score, Social Pillar Score and Governance Pillar Score. Rating Scale 0-10 / 0-3 is considered high ESG-risk ** For illustration purposes only. Source: Allianz Global Investors, For illustrative purposes only. 12

13 Thematic Research Identification of Long Term Environmental Risks and Opportunities Example Description Investment Driver Stranded Asset Risk To prevent a potentially catastrophic rise in global temperatures, carbon emissions have been restricted to no more than 900 billion tonnes to ensure temperature rises remain below 2 degrees. Coal and oil & gas companies are partially valued using the future reserves held on the balance sheet. These valuations may be impaired if restrictions are put in place to limit the use of these reserves. These reserves may become stranded. Gt CO 2 Gt CO Total Reserves Budget to 2050 Allocation of Budget Total Reserves Budget to 2050 Allocation of Budget Listed Unlisted Coal Oil Other Source: Carbon Tracker Initiative / AllianzGI ESG Research 30 September

14 Impact of portfolio on society environment Green House Gas intensity per sales Metric tonnes of green house gas emissions per USD millions of sales Utilities 1,095.1 Telecom Svc Materials ,38 Information Tech Industrials Health Care ,36 Financials Energy 100 Consumer Staples 50 28,82 Consumer Discr DJSI Portfolio 0 Global Sustainability Fund DJSI MSCI ACWI Data shown for Global Sustainability Fund vs DJSI and MSCI ACWI as of 30 June Source: Bloomberg as of latest Fiscal year. 92% benchmark, 79% portfolio. 14

15 4 Questions? 15

16 Disclaimer Investing involves risk. The value of an investment and the income from it could fall as well as rise and investors might not get back the full amount invested. Investing in fixed income instruments may expose investors to various risks, including but not limited to creditworthiness, interest rate, liquidity and restricted flexibility risks. Changes to the economic environment and market conditions may affect these risks, resulting in an adverse effect to the value of the investment. During periods of rising nominal interest rates, the values of fixed income instruments (including short positions with respect to fixed income instruments) are generally expected to decline. Conversely, during periods of declining interest rates, the values of these instruments are generally expected to rise. Liquidity risk may possibly delay or prevent account withdrawals or redemptions. Past performance is not a reliable indicator of future results. If the currency in which the past performance is displayed differs from the currency of the country in which the investor resides, then the investor should be aware that due to the exchange rate fluctuations the performance shown may be higher or lower if converted into the investor s local currency. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been, or will be, made or concluded, shall prevail. This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht ( The duplication, publication, or transmission of the contents, irrespective of the form, is not permitted. 16

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