High time for bold climate action

Humanity is in a perilous position entering the UN-brokered international climate talks in Scotland, known as COP26, later this month. For the last two centuries, we’ve been filling our skies with greenhouse gases (GHGs). The result is that our atmosphere is denser with carbon dioxide than at any point in the last 4 million years.

Carbon dioxide is the primary GHG emitted through industrial production, mobility, housing and other human activities. It traps solar radiation in the atmosphere, like glass collects  heat in a greenhouse, and heats our planet. Temperatures today are around 1.2 degrees higher than before we began burning massive amounts of fossil fuels.

The Intergovernmental Panel on Climate Change's (IPCC) 2021 report makes clear that the recent burst of extreme weather is the result of rising temperatures. The freak floods in China and Germany, the unprecedented temperatures in the Arctic and the “heat dome” that killed hundreds of people in the US’s Pacific Northwest all bear the fingerprints of climate change. And each further fraction of a degree of warming will bring greater rainfall, higher rises in sea levels and more intense droughts and wildfires.

We don't have all the time in the world

In 2015, in Paris, nearly all countries of the world agreed to hold the global average temperature increase to “well below 2°C” above pre-industrial levels, but ideally no more than 1.5°C. Scientists believe that 2.0°C is the “tipping point” beyond which it will be too late to save the planet. Known as the Paris Agreement, the UN-convened conference marked unprecedented political recognition of the risks of climate change. The gathered nations made an ambitious step by pledging to cut GHG emissions, known as Nationally Determined Contributions (NDCs).

Signatories were to update their NDCs by July this year. As of mid-October, only 70 countries had submitted an update. Worse, none of the world’s major economies – including the entire G20 – have a climate plan that meets their obligations under the Paris Agreement. This is despite scientists’ warning that deep cuts to GHGs are needed now. 

Climate disasters threaten our planet

The majority of international climate scientists state that we are heading towards a planetary emergency and that limiting global warming and adapting to more frequent weather extremes are crucial. The insurance sector – and especially global players like Allianz – is exposed to these risks. Climate change is increasingly affecting our business: through insurance policies, for instance, those covering health, property damage and other losses, as well as changes in sectors and business models we underwrite.

Furthermore, as a large-scale institutional investor with significant stakes in economies, companies, infrastructure and real estate, our assets are increasingly affected by climate change and scarce resources. This influences asset values and their ability to generate long-term returns. But it’s not only about a balanced portfolio – as large scale investor we are committed to driving the global transition of a 1.5°C-economy – we want to create change in the real economy. 

Recognizing that climate change will impact our clients and communities in which we operate, Allianz systematically considers sustainability criteria in all insurance and investment business activities. A global challenge can’t be solved alone, and thus we gather in sector-wide networks and work with other insurance companies and international political organisations on establishing sustainability and net-zero standards for the insurance sector.

One of our flagship partnerships is the United Nations-convened Net-Zero Asset Owner Alliance (AOA), of which we are a founding member. This network of committed institutional investors now has 56 members, comprising pension funds and insurance companies representing $9.3 trillion in assets under management. The members commit to transitioning their portfolios to net-zero GHG emissions step by step latest by 2050 and will deliver to the first interim target to reduce their portfolio carbon footprint by 16% - 25% already by 2025. All members plan to regularly report on progress.

Seconding this successful blueprint, Allianz has recently joined the newly established Net-Zero Insurance Alliance and the Net-Zero Asset Manager Alliance.

Allianz helped form the Alliances because we believe capital markets are one of the most critical tools available to fight climate change. Asset owners, asset managers and insurers have a unique power to shift capital flows to speed the transition to clean energy and build the net-zero economy.

Further, we stopped financing coal-based business models already in 2015. Since then, no new investments have been allowed, equity stakes have been divested and fixed income investments made before 2015 are in run-off. Coal-based business models will be phased out in our insurance and propriety investments by 2030 (Asia 2040). In our own house, we plan to source 100% renewable power for our group-wide operations by 2023.

This decade is decisive

With COP26 around the corner, there is more ambition and commitment to tackle climate change than ever. Allianz believes we must seize this opportunity to inspire real-world action and change.

It will be a poor result from Glasgow if governments merely double down on existing pledges without meaningful action resulting in a fast transition to a low carbon, renewable energy-driven economy. Scientists warn that the world must cut emissions in half this decade before zeroing them out by 2050. Unfortunately, carbon emissions are on track to rise by 16% by 2030 rather than fall.

However, countries representing more than half of the global economy have already gone beyond the goals set in Paris and are bound by comitments to reach net-zero. With the US and other countries preparing net-zero pledges for COP26, more than three-quarters of the world economy could be on track for full decarbonization by mid-century. If such collective action results from Glasgow, it would be a good result and make the Paris Agreement goal of keeping global warming well below 2˚C achievable.

A more ambitious COP26 will be if policymakers raise the bar by ceasing to support fossil fuels with subsidies that distort energy markets. It would also be more positive if they support programs for financial market transparency, in line with the Paris Agreement. And, in addition, encourage countries and regions to use a stringent market-based price of carbon so markets can consider the actual costs of carbon emissions.

Climate change is not a problem that can be put off. It is here, and the impacts are already too costly for people and our planet. Decisive advances must be taken this decade to hit the mid-century target of 1.5°C. Further delays mean dramatically more harm and a vastly more costly bill to make up for the lost time.

As one of the world’s largest insurers and institutional investors, we will do our part. We are willing to face short-term effects on our portfolios to invest long-term and to use our leverage to shape a fair transition to a low-carbon future.

See also

Oct 26, 2021

Webcast about the role of the Financial Industry in transitioning the World to net zero. (registration required)

Oct 20, 2021

A virtual roundtable hosted by Michael R. Bloomberg and Günther Thallinger ahead of the G20 Summit.

Oct 11, 2021

An editorial by Allianz board member Günther Thallinger

On October 27, 2021, the World Economic Forum published an open letter from The Alliance of CEO Climate Leaders on its website.

"We, the Alliance of CEO Climate Leaders," the letter begins, "stand ready to work side-by-side with governments in a joint public-private effort to accelerate the race to net-zero."

Allianz CEO Oliver Bäte was among the signatories.

The Allianz Group is one of the world's leading insurers and asset managers with around 125 million* private and corporate customers in nearly 70 countries. Allianz customers benefit from a broad range of personal and corporate insurance services, ranging from property, life and health insurance to assistance services to credit insurance and global business insurance. Allianz is one of the world’s largest investors, managing around 741 billion euros** on behalf of its insurance customers. Furthermore, our asset managers PIMCO and Allianz Global Investors manage about 1.8 trillion euros** of third-party assets. Thanks to our systematic integration of ecological and social criteria in our business processes and investment decisions, we are among the leaders in the insurance industry in the Dow Jones Sustainability Index. In 2023, over 157,000 employees achieved total business volume of 161.7 billion euros and an operating profit of 14.7 billion euros for the group.
* Including non-consolidated entities with Allianz customers.
** As of June 30, 2024.

Press contact

Anja Rechenberg
Allianz SE
As with all content published on this site, these statements are subject to our cautionary note regarding forward-looking statements:

Further information

The Power of Collaborative Vision: Five Years and Nearly $10 Trillion Dollars Later on a Net-Zero Journey

As one of the world’s largest insurers and asset managers, our teams work every day to envision new and better ways to help our customers feel physically protected and financially secure. In 2019, our team embarked on a significant endeavor to address a threat that endangers our customers' assets, health, and even lives—climate change: Allianz became the founding member of the Net-Zero Asset Owner Alliance.

Recharging Global Growth

The world is suffering from a dangerous economic procrastination. Nearly a decade after the Paris Climate Accord, we've seen more delays than decisive action.

Allianz spearheads Sustainable Investments with Net-Zero Asset Owner Alliance's comprehensive new protocol

The Net-Zero Asset Owner Alliance (NZAOA) is leading the financial industry towards a sustainable future. It has recently released the fourth edition of its Target-Setting Protocol, a comprehensive guide that outlines the pathway for investors to reduce portfolio emissions significantly by 2030, aligning with the 1.5°C ambition set forth in the Paris Agreement.