Why climate action remains essential

Günther Thallinger: Every transformation faces resistance, and making economies more efficient while reducing climate impact is no different. Climate action is challenging, but the reality of climate change remains, as does the need for economies like Germany's to become competitive again. The cost of inaction is higher than the cost of transformation and adaptation. Extreme heat, storms, wildfires, floods, and billions in economic damage occur each year. In 2024, insured natural catastrophe losses surpassed $140 billion, marking the fifth straight year above $100 billion.

Transitioning to a net-zero economy is not just about sustainability; it is a financial and operational necessity to avoid a future where climate shocks outpace our ability to recover, straining governments, businesses, and households. Without decisive action, we risk crossing a threshold where adaptation is no longer possible, and the costs – human and financial – become unimaginable.

If we succeed in our transition, we will enjoy a more efficient, competitive economy with cheaper, more reliable energy, more stable agricultural and natural resource output, and lower risks of natural disasters. In short, a higher quality of life.

Günther Thallinger: You are right - we talk sustainability, not only climate. And Allianz’s commitment stays. The example of climate helps to explain. We take a long-term view to manage climate risk, protect our customers, create value for shareholders, and ensure financial stability. The energy transition is underway, and businesses, including Allianz, must adapt. Our strategy reflects this commitment.

Allianz has committed to net-zero greenhouse gas (GHG) emissions by 2050 for our proprietary investment and Property-Casualty insurance portfolios and set 2030 intermediate targets. For our own operations, we have switched to 100% renewable electricity and have set an intermediate target of a 65% emission reduction per employee by 2030 versus a 2019 baseline.

Günther Thallinger: An investor's key job is to assess how investments may evolve. During times of threats to sustainability in economies, investors must evaluate asset exposure and work to mitigate these threats. In this sense Allianz aims to ensure a stronger, more competitive future economy. By taking science-based action to mitigate climate change, we align with the 1.5° Celsius target of the Paris Climate Accord, limiting harmful effects on the economy and people. We have already reached our intermediate 2025 decarbonization target for corporate bonds and listed equities in 2023 as we reduced our financed GHG emissions by 44 % against the target of a 25 % reduction. For our financial year 2024, we are confident to have continued this positive performance. 

Green energy and sustainable infrastructure are future technologies with significant growth potential. Investing in these areas allows us to profit in the long run.

Günther Thallinger: Extreme weather events are becoming more frequent and severe. Insuring these damages is getting harder but more crucial as protection gaps widen and costs rise. Only slightly more than 40% of weather-related losses are insured globally. As insurers, we must provide protection and help clients adapt by supporting prevention and mitigation efforts.

We are committed to offering advanced, AI-based prewarning systems to minimize damage from storms or hail. Additionally, we are developing innovative insurance products like parametric insurance, which triggers automatic payouts based on predefined weather conditions.

Günther Thallinger: The net-zero alliances, especially the Net-Zero Asset Owner Alliance (NZAOA) established by Allianz in 2019, remain crucial. The alliance has grown to 89 members, with most committed to reducing emissions in their portfolios by 6% annually. It continues to set standards for responsible investing.

Success is driven by the economy's transformation towards creating jobs in new sectors, generating less carbon, and existing within a more stable climate. Companies, investors, and regions are shifting towards sustainability because it's an economic necessity. For example, Europe's transition to renewables is about getting access to cheap energy.. That's why long-term investors like Allianz are committed to this path.

Günther Thallinger: Investors must balance long-term strategy with short-term performance reporting. Long-term investing supports economic transformation, but publicly traded companies face pressure to show immediate returns.

This tension is not new, but today's divergent signals make it more visible. We focus on clearly communicating our transformation plan, outlining our investment direction and the economic shift we aim to support. When investors understand our long-term strategy, explaining short-term developments becomes easier.

When stakeholders understand our long-term strategy, explaining measures and how these improve products and services as well as support short term results is possible.

Günther Thallinger: No company can tackle these challenges alone. Allianz supports finance solutions combining public and private capital for the green transition, like the Hamburg Sustainability Platform, which mobilizes private capital for climate resilience, renewable energy, and sustainable infrastructure projects. We also advocate for a state-backed reinsurance model in Germany to improve insurance availability and affordability for catastrophic events.

Through the InsuResilience Global Partnership, we partner with governments, development agencies, and NGOs to enhance climate risk insurance for vulnerable countries. By leveraging public funds to de-risk private investment, the initiative expands access to affordable disaster insurance, especially in the Global South, providing rapid payouts after extreme weather events and helping countries build financial resilience against climate disasters.

Günther Thallinger: We are here to help secure the future of our customers. Economies must be kept sustainable and hence transform. Simply because what is not sustainable cannot be sustained. Climate change is one of the sustainability challenges we face. Allianz can help recognize and manage risk, support adaptation to keep risk in check and work together with clients and partners to transform economic activities to become sustainable. This are very big opportunities for Allianz.