Allianz global sustainability fund

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Wuyue Sun
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Allianz global sustainability fund is aiming for long-term investment returns while being transparent on the limitation of their own definition of “sustainability”. With ESG investing and related topics becoming trendy, more and more financial services have started waving their “green” flags. It is important to lift the veil of their claims and observe the flow of their trade. Being transparent is only the first step to green finance and we need to ask for more. More importantly, we have to ask ourselves as future investors, how should we balance the climate impact and returns for our own investment? How much compromise are we willing to make for returns?

What it's made of:


The fund was launched in 2003 and has more than 2.2 billion euros under fund assets by 2022 February. The fund has received high regard in sustainability, as its MSCI ESG ratings are AAA, the highest rating on the scale, which indicates that 60% of the fund's holdings receive an MSCI ESG Rating of AAA or AA (ESG Leaders). However, MSCI found that 1.5% of total revenue is fossil fuel-based. 

Top holdings with MSCI ESG Rating: Microsoft Corp(AAA) 9.46 %; Unitedhealth Group Inc (BB) 4.48 %; Adobe Inc (AAA)3.75 %; Shell Plc (AA)3.45 %; Stora Enso Oyj (AAA) 3.26 %; S&P Global Inc (AAA) 3.11 %; Visa Inc (A) 2.92 %; Avantor Inc (BBB) 2.89 %; Applied Materials Inc (AA) 2.83 %; Nestle (AA) 2.81 %

By 2021 September, Shell composed 2.77% of the sub-fund assets in the fund, which could be arguably reasonable as it is an oil and gas company (instead of coal) with a growing operation on renewable energy. One of the possible reasons Shell is included in the portfolio is that even though Shell has produced long-term adverse impacts on climate change and biodiversity, the company has set a goal to become net-zero emissions by 2050. This could be aligned with the investment objective set by this fund, "to attain capital growth over the long term". Additionally, the climate impact of the holdings are not the primary concern, as we can see from Applied Materials Inc, a semiconductor company, "has an Implied Temperature Rise of 3.75°C and is on track for warming that would impede global climate goals" commented by MSCI. However, no accusations can be made that the fund is not "sustainable" as it was labelled. Allianz's Sustainable Investment Exclusion Policy Strategy swiftly dodged these underlying issues, emphasizing the climate impact of coal-related companies. 

At the same time, appreciation must be given to the disclosure transparency of the Allianz global sustainability fund. With a reader-friendly web page design, documents on portfolios and related investment policies are easy to find.

Overall, the fund's portfolios have an accessible level of transparency. The majority of the portfolios is regarded as sustainable by major ratings, while flexible standards were applied to some promising companies that would bring long-term returns. Overall, the rating for this section is 1.8/3.

How it's made:


This fund is invested following Allianz's Sustainable and Responsible Investment Strategy (SRI Strategy) set with minimum standards of no investments in tobacco, controversial weapons organizations, the companies investing heavily in both categories, and United Nations Global Compact Violators (14318 companies). As discussed in the previous session, Allianz limited its climate change considerations to only coal-related companies, which justified putting money on some substantial carbon-footprint companies and industries having a potential negative impact on controlling global warming under 2℃. The sub-fund portfolios are not that "sustainable" either. The investment policy of the subfund claims that "max 30% of Sub-Fund assets may be invested in Equities other than described in the investment objective under the SRI Strategy". At the same time, whether companies outside of the SRI Strategy were invested in the subfund is hard to examine from the disclosed portfolios. The subfund can only be found on an abbreviated name and ISIN number, which is a barrier for non-organizational investors to form decisions. 

Although the portfolios align with SRI Strategy and Allianz's promise of "stopped financing coal-based business models since 2015", it is evident that this fund is still far from being invested in a truly sustainable way. Considering the narrow scope of the definition of sustainability and the lack of accessibility of the sub-funds, the overall score for this section is 1.5/3.

Who makes it:


Allianz SE is an international insurance and asset management company ranking 24 in Forbes 2021 Global 2000. Until 2020, it had USD 712 billion in assets under management. Allianz claimed to have reached operational carbon-neutral since 2012 helped by offset projects and announced future targets, including completely phasing out coal-based risks from P&C insurance portfolios by 2040 at the latest. 

The fund manager is publicly disclosed on the website, with a detailed description of his experience and expertise on the Allianz website.

Transparency has been displayed through the information available with room to advance. The self-valuation of the company's environmental impact can be found on Allianz Sustainability Report 2020, which showed that the company saw a significant fall in GHG emissions, water and waste consumption in 2020 compared to 2019 due to covid. However, the data in previous years was not presented. According to the report, Allianz has reached a satisfying gender balance in global staff, with 41.9% female and 58.1% male. The leadership team comprises two males and two females without minority ethnic groups.

Regarding inclusiveness, the company claimed that it had reached a score of 73% in the Inclusive Meritocracy Index (IMIX), which the company establishes without further disclosing its metrics. Allianz also noted that when investing in companies with an acknowledged ESG risk, evaluation by the portfolio manager should be documented. Words like this do not make a difference because the portfolio might not be as sustainable as it is indicated. Allianz disclosed that its annual sustainability reports follow the Global Reporting Initiative (GRI) Standards – core option while listing out the sections and reasons for missing components that should have been disclosed in the standards. Third-party opinions are present in the Allianz claims as PwC conducted a limited assurance review of sustainability reports since 2016. 

Allianz participates in various initiatives related to sustainable finance. However, it is more important to look at their actions instead of titles and claims. As a financial service company, it has made room for flexibility regarding ESG investing while mainly being transparent about it. Overall, this section is assigned a 2/3 rating.