Publications and research partnerships

Allianz publications

This section covers publications written or commissioned by Allianz.


 

Allianz Climate and Energy Monitor

The Allianz Climate and Energy Monitor measures the need for investment for an energy transition among the world’s most important 19 countries (the G20 includes these 19 countries plus the EU), and ranks them on their attractiveness as potential destinations for investments in low-carbon electricity infrastructure.

 

G20 policies are insufficient for decarbonizing the power sector

  • None of the G20 countries is currently taking sufficient action to combat the investment gap in the power sector, which would be necessary to be aligned to a 2ºC limit in global average temperature increase.
  • The countries vary widely in terms of their investment needs and attractiveness. For instance, while China will need to attract annual investments of USD 208bn to address its investment gap, Argentina’s shortfall is estimated at USD 5bn. And while countries such as Brazil or India are just beginning to introduce policies to promote transition torenewables, the UK and Germany already have a significant policy and installation track record.

 

Emerging countries face a huge investment gap while the OECD countries are leaders in policy framework

  • Together, the G20 countries will require roughly USD 710 billion annually in absolute investment until 2035.
  • Brazil, India, Indonesia, China and South Africa will need to bridge 50% of this investment gap – having the highest investment needs – owing to their market size and development needs. This percentage increases when the overall vulnerability of their power infrastructures to the impact of climate change is taken into account.
  • Most attractive in terms of investments are Germany, the United Kingdom and France due to good performance across all indicators. In the US, favorable general investment conditions and a large and ready market partially mask the generally low federal policy support.
  • Notably, China has unsurprisingly high overall investment needs, but also the fourth-best investment attractiveness.
  • Some of the countries with the highest investment needs – such as Brazil, India, Indonesia and South Africa – nevertheless have an insufficient investment framework and are therefore possibly unable to attract substantial private sector investment.
  • In India, ambitious green policies are encumbered by generally unfavorable investment conditions. It will need a rapid translation of policy euphoria into hands-on, focused deployment in order to realize its full potential in this market.
  • Being amongst the least attractive countries for investments, even countries with relatively low investment needs such as Mexico, Turkey and Argentina, still require substantial policy enhancement. These countries in particular need to level the playing field for investing in renewable energy as opposed to their massive fossil fuel sectors.

 

The G20 countries need to establish coherent strategies and policies to attract investments

  • A coherent climate strategy is a vital element in giving investors confidence in the political commitment, but it also needs to translate into concrete and transparent policy measures that make investment in renewables attractive in comparison with fossil fuels. It also demands a favorable general macroeconomic investment climate.
  • The G20 countries should further strengthen their leadership and market development role to attract investments, also by developing instruments to address specific investment risks. For example, they could allow development banks to mitigate political risks in order to increase the transparency and longevity of investments frameworks.

Trend Compendium on Climate Change - Our World and Us

Published April 2015

As part of its 125th anniversary, Allianz published the book Our World and Us to focus on issues that will have the most profound impact on our way of life in coming decades, like climate change and demographic change. In this book, we find suggestions for how to forge a global climate deal, make business greener, remove carbon from the atmosphere and completely overhaul the way we travel, live in cities and generate electrify.

Allianz Climate Solutions contributed several chapters on the publication.

Arrhenius study sees need for investment incentives for security of power supply

Published February 2015

  • Lack of investments in low-carbon power plants
  • The German government is planning a re-design of the electricity market
  • Allianz Climate Solutions and Germanwatch see need for functional investment incentives

The phase-out of nuclear energy, the increase of renewables energies, and the market exit of unprofitable power plants may lead to bottlenecks in power supply from the year 2020 on. There is a need for new power plants, which are able to flexible react on the natural volatility of wind and solar power. The long lead time for the construction of new power plants and missing stimulus for investments today endanger the security of supply, warns a study from the arrhenius institute for climate and energy policy on commission of Allianz Climate Solutions and the environmental and development organization Germanwatch.

The study, titled "Price peaks or capacity mechanisms - what drives invemstents in new plants?", shows that additional revenue streams are needed for the necessary backup capacities in the future. Furthermore the study analyses that also renewables are not able to refinance on the electricity market but need additional remuneration as well.

"The construction of power plants has a lead time of at least five years. If we want to keep the security of supply in German on today's level, the government has to act now", says Karsten Löffler, Managing Direector of Allianz Climate Solutions.

ACS and PIK publish discussion paper on the market integration of renewable energies.

Publication February 2015

The ongoing shift to renewable energies (RE) in Germany demands a market integration with gradual bearing of market risks of RE projects. This has been and will continue to be a focal point of the debate on regulatory reforms.

Henriette Schweizerhof (Allianz Climate Solutions) and Michael Pahle (Potsdam-Institute for Climate Impact Research) analyze the risk allocation of the current situation as well as the possible risk transfer of coming reforms. Moreover, they examine how this process would be able to avoid constraining the bankability of RE projects and, in general, ensure the continued shift to RE according to the governmental targets.

The paper outlines and discusses two elements that could be at the center of it:

  • First, a support framework that creates incentives for RE projects to increasingly take risks, for which we propose a cascading risk auction mechanism that prioritizes “more risky” projects.
  • Second, design options for (a) “more risky” support contracts and (b) risk transfer in power purchase contracts, which if standardized could help to develop and establish suitable risk mitigation and management approaches on the side of financers.

Arrhenius study shows: energy transition lowers costs of future power generation

Publication April 2014

The German power generation will be cheaper in 2050 if the energy transition is implemented consistently, instead of focusing on conventional fuels, according to a recent study of the German Arrhenius Institute for Energy and Climate Policy. The study has been commissioned by the NGO Germanwatch and Allianz Climate Solutions.

The increasing concerns of industry and retail electricity customers that the energy transition drives costs has led to this study. Arrhenius compared two alternative scenarios for the year 2050:

  1. 80% of power is generated from renewable energy
  2. a conventional scenario, where 58% of electricity is generated by conventional power plants and 42% by renewable energy plants.

In both cases it has been assumed that the European targets for carbon emissions reductions are complied with (-80% until 2050).

The study shows: A consistent energy transition towards renewable energies is not particularly more expensive and can, under certain circumstances, even be cheaper than sticking than a scenario with over 50% power generation from fossil fuels; this result is valid under the assumption that the existing long-term climate protection targets apply for the conventional scenario, too, and that the costs of investing in wind power and photovoltaic systems actually decrease to the extent that science and industry experts today consider possible.

Allianz publishes paper on Climate Bonds

Published July 2013

Climate Bonds, also called green bonds, are considered as a promising investment vehicle to facilitate financing for low-carbon infrastructure.

In July 2013, Simone Ruiz-Vergote, Karsten Löffler, and Thomas Liesch of Allianz Climate Solutions published a paper on climate bonds. It summarizes the different types and structures of climate bonds. Furthermore, it analyses the barriers and possible approaches for an even faster growth of the market.

A series of expert interviews were conducted for this paper.

The paper has been used as chapter for the book Nachhaltige Geldanlagen (sustainable investments) of Frankfurt School Publishing in March 2014.


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Allianz interviews the author of "The world in 2052?"

Jørgen Randers, one of the authors of the report "Limits to Growth", a classic environmental literature, discusses his projections for the next 40 years of life on this planet in an interview with Karsten Löffler, CFO of Allianz Climate Solutions and Greg Langley, editor-in-chief of Project M.

At age 67, Randers, professor of climate strategy at BI Norwegian Business School, remains curious. His current work, 2052, is a description of what he thinks will happen over the next 40 years. "It resembles the pollution crisis scenario from "Limits to Growth", a situation where humanity grows, GDP grows and resources are sufficient to handle growth, but emissions of greenhouse gases are so large that we reach plus two degrees centigrade in warming by 2050. By 2080, we move to three degrees centigrade, which means self-reinforcing climate change and climate crisis are a possibility in the second half of this century."

The interview will be published in the upcoming edition of the Project M Journal: "Point of no returns". The Project M Journal is a corporate, monthly appearing publication of Allianz SE and accessible online via the website www.projectm-online.com.

Hedging Climate Change Risk Report

The report shows how insurers can manage the risk of increasing natural catastrophes.

     

 

 

 

 

 

2dii partnership

Allianz Climate Solutions GmbH and Allianz Global Investors GmbH had a partnership with the 2° Investing Initiative (2dii)  to promote the integration of climate criteria into investment processes within the finance sector.

2° Investing Initiative report finds mainstream stock indices tilting to high-carbon sectors

Allianz commissioned the 2° Investing Initiative to examine the extent to which mainstream stock indices – like FTSE or DAX – are exposed to sectors, which are affected by climate protection regulation, specifically the oil and gas, utilities, and automotive sectors. As institutional investors like Allianz often use these indices as a benchmark for their portfolio composition, the expected upcoming changes to these sectors will be crucial for their future performance.

The study shows that market-capitalization weighted indices are significantly biased against climate-friendly technologies and overweigh high-carbon sectors. The results highlight a need for new or adjusted index products and portfolio management tools.

UNEP / UNEP FI publications

Allianz is a founding member of the United Nations Environment Programme Finance Initiative (UNEP FI). It has been established in 1992 as a platform associating the United Nations and the financial sector globally.

The need for this unique United Nations partnership arose from the growing recognition of the links between finance and Environmental, Social and Governance (ESG) challenges, and the role financial institutions could play for a more sustainable world.


 

Portfolio Decarbonization Coalition - Annual Progress Report 2016

Allianz joined the Portfolio Decarbonization Coalition (PDC) last year at the climate conference in Paris. In November 2016, the PDC launched its second annual progress report, featuring experiences and best practice from all 27 coalition members.

Allianz is especially highlighted for its large-scale renewable energy investments, its climate-related engagement with asset managers and policy-makers and its decision to stop financing coal-based business models.

The PDC has two roles: First, enhancing the dialogue with policy-makers to assure an enabling policy framework. Secondly, it serves as a platform to share experience on portfolio decarbonization. As all members charter new territories, there is a need for strategies for decarbonization (preferential investment, engagement, or exclusions) and new metrics to measure success (like the carbon footprint of portfolios, avoided emissions or similar).

 

UNEP Inquiry: The Financial System We Need

In 2014, the UN Environment Programme launched the Inquiry into the Design of a Sustainable Financial System to get insights from central banks, financial regulators, corporates and other stakeholders on how changes in financial system design can better integrate environmental aspects into financial decision-making.

Its report Inquiry Global Report: The Financial System We Need has been released in October 2015. It provides a Framework for Action with international best practice and a toolkit with possible measures to be adopted on both international and national level.

Demystifying Private Climate Finance

In December 2014, the UNEP FI published the report Demystifying Private Climate Finance.

 

It highlights the importance of unlocking private finance away from routine business-as-usual investments and towards alternatives that are low-carbon for a significant transformational impact of international climate policy.

Designing and implementing effective climate finance policy requires negotiators and policymakers to:

  • Understand and appreciate not only the key characteristics of private finance and the corresponding actors, but  also the full spectrum and diversity of the private finance landscape.

  • Understand where and how exactly private finance fits into the highly diverse and complex landscape of climate change mitigation and adaptation.

  • Recognise that different categories of climate change projects present different issues and challenges when trying to attract private sector investment. Policy interventions at both national and international levels, therefore, need to be carefully tailored to the specific projects, sectors or countries in question.

UNEP FI letter calls for governmental action against climate change

On November 2012, organizations representing global institutional investors called on governments of the world's largest economies for a new dialogue on climate policy. The represented investors are responsible for over USD 22.5tn in assets. The letter addresses the risks arising from climate change and resulting economic impacts. Allianz SE supports this call, through its active membership in UNEP FI, the Financial Sector Initiative of the United Nation's Environment Programme.

 

UNEP FI launches the second part of its study "REDDy-Set-Grow"

In September 2011, UNEP FI launches the second part of its study „REDDy-Set-Grow Part II: Recommendations for international climate change negotiators“. The second part focuses on policy frameworks for successful climate finance.

 

 

 

 

UNEP FI launches study on forestry-based climate finance

In May 2011, UNEP FI launched the first part of its study: “REDDy – Set– Grow: Opportunities, Risks and Roles for Financial Institutions in Forest-carbon Markets.”  REDD+ stands for Reducing Emissions from Deforestation and Degradation plus associated actions to conserve and enhance forest carbon stocks. Its main target is to create incentives to protect tropical and subtropical forests from degradation and deforestation via finance and know-how transfer from industrialized to developed countries. Since required investments in REDD+ are estimated at least USD 17-33 bn/ year and are unlikely to come from governments alone, the study focuses on private finance for forestry-based climate change mitigation. Allianz contributed to the development of the study and participated in the launching event. Part two of the study, focusing on policy frameworks for successful climate finance, will be launched later this year.

UNEP report on green economies

Published in early 2011, the report “Towards a Green Economy” outlines possible ways towards sustainable development and poverty eradication. In particular, the report points at the importance of favourable political conditions and of the development of appropriate financing instruments.

 

 

 

 

UNEP FI Study "Advancing adaptation through climate information services"

In January 2011, UNEP FI published a study involving 60 institutions from all continents, revealing the insufficiency of current climate information and forecasts on the adaptation needs of key economic sectors such as the insurance industry.

 

 

 

 

UNEP FI studies on climate investments in developing countries

In 2011, the UNEP Finance Initiative published an updated version of the 2009 report "And yet it moves", which analyzes successful case studies of recent CDM projects in Africa in order to share common success factors with the wider investment community. A second report analyses the question of how to mobilize private sector capital for carbon activities in developing countries.

 

 

 

 

UNEP FI statements on climate change

In 2010, Allianz as a member of UNEP FI signed the global investors’ statement on risks and opportunities of climate change, as well as the global insurance industry’s statement on adaptation to climate change in developing countries, both published by UNEP FI.

 

 

 

 

UNEP FI CEO Briefing - Carbon Crunch

A report by the Finance Initiative of the United Nations Environment Programme (UNEP FI) on the relationship between climate change and the financial sector was presented at the Climate Conference in Bali in December 2007.

 

 

 

 

 

 

UNEP SEFI Report 2010

A joint report of UNEP, SEFI and Bloomberg New Energy Finance outlines current investment trends in the sustainable energies sector.

 

 

 

 

 

 

 

Allianz WWF Partnership

In 2007, Allianz and WWF set up a worldwide partnership, which lasted until 2011. A variety of projects came out of this, amongst them the publications below.

In an interview, former Board member Joachim Faber explained the pillars of the partnership.

 

Allianz und WWF publish two climate studies

In November 2009, Allianz and WWF published the climate study "Report on Energy and Climate Policy in Europe" (RECIPE). The study shows that ambitious reduction targets of greenhouse gas emissions at relatively low costs are possible - but only if both the government and the economy act decisively within the next ten years. A second study, "Tipping Points", analyzted factors that might cause the Earth's climate system to be forced past a "tipping" point, as well as the consequent economic impacts on the insurance industry.

 

 

G8 Climate Scorecards Report 2009 published

In July 2009, Allianz and WWF jointly presented the G8 Climate Scorecards 2009 for the third consecutive time. It includes a preface from Allianz Board Member Dr. Joachim Faber.

 

 

 

 

 

 

WWF report on carbon markets in China

In July 2008, the WWF published a report on the role of carbon finance in China, putting a focus on the CDM (Clean Development Mechanism) market, but also considering the voluntary carbon market. The authors of the report have found out that the CDM market is already well established in China, causing a range of positive side effects, but also that the uncertainty about a Post-Kyoto framework has noteworthy obstructive impacts.

 

 

 

Study "G8 Climate Scorecards 2008" published by Allianz and WWF

The study "G8 Climate Scorecards 2008" was jointly commissioned by Allianz SE and the World Wide Fund for Nature (WWF). It ranks the G8 countries according to their climate protection engagement, based to nine quantitative indicators and their progress towards their individual Kyoto targets.

 

 

 

 

Release of two joint studies of Allianz and WWF on the implications of climate change

In June 2005, Allianz and WWF published a study looking at the consequences of climate change for the financial sector, emphasizing the importance of stable political frameworks and activities for the fight against climate change. A second study was released in October 2006, outlining the consequences of climate change on the insurance sector, focusing on the United States and the reactions of local insurers.

 

 

Other publications

Mercer Study "Investing in a time of climate change"

Published June 2015

Climate risks are inevitable, but investors can prepare by enhancing risk analysis and governance and increasing the time horizon. The Mercer study “Investing in a time of climate change”, analyzes the potential impacts of climate change and accompanying developments on returns to demonstrate why climate-related risk factors should be standard considerations for investors.

Along with likely impacts on investment portfolios, the report provides practical suggestions for mitigation and managing risk exposure and seizing opportunities. The study recommends an integrated approach that establishes investment beliefs and policy, enhances processes and then reviews the portfolio.

Four climate risk factors were isolated in the study that indicate the future implications of climate change for investors: technology, resource availability, (physical) impacts and policy; or the TRIP factors.

  • Technology refers to the rate of progress and investment in the development of technology to support the low-carbon economy.
  • Resource availability refers to the impact on investments of chronic weather patterns and related physical damages
  • Impact is the physical impact on investments of acute weather incidence/severity (that is, extreme or catastrophic events).
  • Policy is all international, national and subnational targets, mandates, legislation, and regulations meant to reduce the risk of further man-made or anthropogenic climate change.

The study found that in the four different scenarios for factor development considered, the specific sensitivity of the different asset classes resulted in quite pronounced impacts for some sectors and less for others. Especially the energy and utilities sectors showed a high sensitivity towards all risks, with renewables and nuclear energy being the only technologies trending to the positive side.

Furthermore, the Real Estate sector and transport infrastructure showed a strong exposure towards physical risks of climate change with a  lower chance to benefit from technology and policy advancing. Agriculture and forestry on the other side are highly sensitive towards (negative) changes in resource availability.

The research project led by Mercer Consulting involved institutional investors from across the globe accounting for a combined asset under management of USD 1500 billion. Allianz Climate Solutions (ACS) was one of the research partners. Karsten Löffler, Managing Director ACS, believes “the Mercer study is an important step in channeling scientific and regulatory insight on climate change into the investment process and could become a standard toolbox for the strategic asset allocation.”

ClimateWise summarizes IPCC report on climate change adaptation

Extreme weather events and their impacts on society are a key concern for the international insurance industry. Understanding trends and detecting causalities is vital for those who are involved in the management and transfer of disaster risks. Therefore, ClimateWise conducted a summary of the IPCC special report on managing the risks of extreme weather events and disasters to advance climate change adaptation.

 

 

With support of Allianz, GIZ publishes a study on climate finance in developing countries

In June 2011, on the occasion of the UN Climate Negotiations in Bonn, the Climate Protection Programme of the Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH  published its latest study on climate finance in developing countries, on behalf of the Federal Ministry for Economic Cooperation and Development. The study titled "Smart climate finance - Designing public finance strategies to boost private investment in developing countries" is a result of a joint project of GIZ and Allianz Climate Solutions GmbH (ACS) and has been compiled by the International Advisory Services of the Frankfurt School of Finance and Management. ACS supported GIZ during the preparation, review process and presentation of the study.
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