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Pimco Owner Allianz Weighs Dropping Assets in Climate Push

Stephan Kahl
·2 min read

(Bloomberg) -- Allianz SE may cut investments in stocks and bonds issued by emissions-intensive companies as the owner of Pacific Investment Management Co. steers away from businesses that foment global warming.

Europe’s largest insurer wants to reduce greenhouse gas emissions in its stock and corporate-bond portfolios by a quarter over the next five years, according to board member Guenther Thallinger. The push will focus on corporate investments including power generation, transportation and automakers, he said.

As part of the strategy, Allianz will initially encourage companies to adopt more environmentally friendly policies, Thallinger said in an interview. “However, there might be some investments that do not show sufficient development toward our goals and in which we then have to reduce our allocation,” he added.

Allianz belongs to a group of insurers and pension funds that have pledged to run carbon-neutral investment portfolios by 2050 as part of the so-called Net-Zero Asset Owner Alliance.

It reflects a growing trend toward considering environmental, social and governance issues when allocating capital, and mobilizing markets to support the transition to a lower-carbon world was among the key goals of the 2015 Paris climate accord.

Allianz will not necessarily exit entire industries as there are always some companies making progress, Thallinger said. It’s looking to buy more assets that are already climate-neutral or contribute toward slowing global warming, he said. Investment decisions will only apply to Allianz’s own portfolio and not to assets it manages for third parties.

The pledge to reduce emissions by a quarter by 2025 compared to the end of 2019, which was announced on Thursday, is a first step toward reaching zero emissions by 2050, Thallinger said. Allianz also aims to bring all real estate investments and other asset classes in line with a goals to limit global warming, he said.

While the company had 2.3 trillion euros ($2.8 trillion) in assets under management at the end of the third quarter, only about 600 billion euros were owned by Allianz. Additional investments bring the insurer’s total assets to about 800 billion euros.

After looking at stocks and bonds in a first phase, Allianz will evaluate other asset classes like infrastructure. Thallinger said sustainability and returns are not necessarily mutually exclusive. “We believe that our sustainability approach will improve our investments in terms of risk and return,” he said.

(Adds announcement, additional asset classes in seventh paragraph)

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