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Climate Change and the Financial Industry:
An Agenda for Action
Michael Anthony, Allianz SE
March, 2007
Index of Slides
1. Facts on Climate Change
2. Allianz Response: Knowing and Understanding the risks
3. Allianz Response: Managing the risks and capturing the opportunities
© Copyright Allianz
2
Allianz Responses: Knowing and Understanding the risks
Commitment
"The insurance industry has always played a key role in helping
business and society understand new risks. We provide an early
warning, if you will. Allianz believes it is already seeing signs that
climate change is a serious emerging risk, and we expect it to remain a
top-tier issue for the insurance industry for many decades to come.”
- Clement Booth, Allianz SE board member
“Many customers still perceive climate change issues as being relevant
to Socially Responsible Investment only. However, as asset managers, it
is our duty to look at all risks that may be impacting our client’s
investments. In the end, carbon risk will be a market risk. So we must
balance the short term with the long term risks. Climate change is no
exception.”
- Joachim Faber, Allianz SE board member and CEO of Allianz Global Investors
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3
1. About Allianz
Leveraging our Products, Services and Global Reach
 Allianz is a leading global financial services provider, present in more than 70
countries with more than 170,000 employees.
 The international group is led by the holding company, Allianz SE (Munich).
 Allianz serves more than 60 million customers worldwide, with
comprehensive range of products and services across 3 business lines
 Insurance
 Banking
 Asset Management
 We think our global reach and our ability to provide integrated financial
solutions that enable the transition towards a low carbon economy
position us centrally to tackle rising global calls for climate action.
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Allianz Responses from Awareness
Awareness to Action
 Successful & expanding climate response…
Jan. ‘05
Allianz &
WWF team up
to analyze
climate risks
in Allianz’s
business
Catalys
t
© Copyright Allianz
June ‘05
Allianz &
WWF publish
“Climate
Change & the
Financial
Sector: An
Agenda for
Action”
Oct. ‘05
Jan. ‘06
May. ‘06
Allianz
Climate Core
Group
established to
coordinate
emerging
Group climate
activities
Allianz Group
Climate
Strategy to
prioritize and
focus
developing
Group
response to
climate risks /
opportunities
80 point
Climate
Action Plan
assigns
responsibility
& timeframes
to implement
Climate
Strategy
March. ‘07
Allianz
Austria
launches
climate
friendly car
insurance
scheme
From Awareness to Action…
5
Allianz Responses: Knowing and Understanding the risks
Research
 Allianz & the Worldwide Fund for Nature (WWF) have partnered to
transform the financial sectors response to climate change.
 Published “Climate Change & the
Financial Sector: An Agenda for Action”
in 2005.
 Published “Climate Change &
Insurance: An Agenda for Action” in
2006
 Upcoming June 2007 report “The Geopolitics of Climate Change” will look
at the implication of climate change in Europe's neighboring countries.
 Upcoming sector analysis, will examine the costs of climate change for
different industries in Europe.
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Allianz Responses: Knowing and Understanding the risks
Research
 Key results from Allianz/WWF reports in 2005 & 2006
 Financial Industry needs to systematically screen climate risks.
 Extent and frequency of natural catastrophes will increase with warming
climate - a substantial risk to the insurance sector.
 Proactive companies can reduce risks and capture new opportunities
like services for carbon trading markets.
 Financial industry plays a pivotal role in mitigating climate risks and
transitioning to a clean energy, low carbon world.
 The financial industry needs to better address the growing impacts of
climate induced damages. Insurance needs to find ways to incorporate
future climate impacts into today’s risk models.
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Allianz Response: Managing the risks and capturing the opportunities
Business Cases (Overview)

Allianz is a leading insurer in Germany for renewable energy solutions

Allianz’ banking arm, Dresdner Bank, is the leading service provider for the
rapidly growing European emissions trading market.

Allianz Global Investor’s “Ecotrends Fund”, which invests in renewable
energy, collected > €1 B in less than a year in Europe, US and Asia

Allianz Capital Partners is investing parts of life insurance premiums into
wind farms across Europe (€500 M in next 5 years).
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Allianz Response: Managing the risks and capturing the opportunities
Business Case for Insurance

In our global industry insurance business alone, 40 percent of damages
are due to storms and floods.

The insurance industry traditional assesses risk based on historic data.
Insurers need to account for future weather related risks

Allianz Global Corporate and Specialty uses Google Earth to visualize
regional risks.
 Premiums might rise in some geographical areas

Customers increasingly demand “green” products that not only cover their
risks but also reward their environmental behaviour
 Allianz introduced green product schemes in the US and Austria
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Allianz Response: Managing the risks and capturing the opportunities
Business Case for Banking

Dresdner Bank has become a leading player in the European emission
trading

Dresdner Bank and Gazprombank recently announced a joint venture
(Carbon Trade and Finance SICAR S.A.) to invest in projects that generate
CO2-certificates which Dresdner sells to the investors.

Dresdner Bank also provides guidance to investors and policymakers
worldwide on the development of the carbon emission trading market.
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Allianz Response: Managing the risks and capturing the opportunities
Business case for investment

In spring 2006, AGI launched the Allianz RCM Global Eco Trends Fund
which invests in companies with exposure to Eco-Sectors, collecting more
than 1 billion euros in less than a year.

The funds exposure to sectors like EcoEnergy (e.g. alternative energy and
energy efficiency) represents a innovative investment vehicle to
acknowledge climate conscious investment value.

In 2005 Allianz Specialised Investments was founded to invest 500 million
euro in renewable energies, mainly wind.

Allianz estimate: Market of renewable energy to grow worldwide to Euro
250 billion until 2020.
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Allianz Response
Political Framework
 Allianz actively supports the EU targets for 20% CO2 reduction by 2020, as
well as a binding target of 20% share of renewables in energy mix.
 Allianz has also called upon the U.S. Congress for a binding CO2-reduction
target as well as the introduction of a cap-and-trade system similar to the
European Trading Scheme.
 Binding targets are particularly relevant for us as an investor to create the
necessary investment security.
© Copyright Allianz
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“Climate change creates significant costs for the financial industry. In the
interest of our clients and shareholders we are obligated to take these risks
into account when making decisions on insurance underwriting, investments
or lending credit.“
Joachim Faber, Allianz SE Board Member and CEO of Allianz Global Investors
www.allianz.com/climate
[email protected]