April, 23 2024

At Allianz Trade, we are committed to leading the way in our industry’s sustainability transformation. That means not only ensuring that we meet our emissions reduction targets for our operations (-65% by 2030), but also managing our portfolio to mitigate ESG risk and support companies that are prepared to transition towards sustainable growth. 

As part of our robust sustainability roadmap and in alignment  with the Allianz Group’s ESG Integration Framework, we are therefore measuring the environmental footprint of our customers. By fully integrating sustainability into our risk assessment and commercial underwriting processes, we are guiding our portfolio towards Net Zero and building sector-wide decarbonization pathways. This will enable us to do three things. First, this will help make our portfolio more climate resilient. Second, we will be in a better position to support our current customers in their Net Zero transitions. Third, we will be better positioned to support businesses involved in low carbon and renewable energy sectors. 

When we launched our sustainability roadmap, the first thing we wanted to do was measure our portfolio’s overall environmental impact, then map out the carbon intensity of each sector.

Having completed the mapping exercise, we’re currently constructing a trajectory, referred to as a sector pathway, which charts the evolution of our portfolio and the targets we’ve set. This trajectory aims to lower our overall carbon footprint by encouraging our clients to accelerate their transition and by increasing our exposure to the most sustainable sectors. We will closely manage this evolution in order to guide our commercial and risk appetite.

Moving forward, a crucial question arises: How do we ensure that our credit-insurance policies consider the new risks associated with climate change and decarbonization? Our job is to analyze the potential impact of all risk factors on corporates’ financial health, and sustainability matters and transition risks are fully part of this framework.

I’m part of Allianz Trade’s Global Sustainability Office, and we collaborate closely with our underwriters and credit analysis to help them enhance their Environmental, Social, and Governance (ESG) analysis. We've orchestrated a series of training sessions aimed at empowering this community to better understand and incorporate ESG factors into their assessments. These are crucial in framing pertinent questions regarding ESG, and analyzing both physical (such as a factory damaged by a flood) and transition risks (such as a company that does not complies with current regulations).

As a leader in trade credit insurance, we acknowledge our pivotal role in promoting climate resilience. But we also recognize that we are exposed to some businesses that may have different risk profiles. In this regard, our message is clear: we are striking the right balance between our credit standards and engaging with businesses that are driving the energy transition. Each time we enter into a contract, we are essentially safeguarding against the default of the buyer – our client's client. But we also have to check its exposure to transition risks. Transition risk is a key factor in corporates’ resilience: a company that does not anticipate and prepare its transition could become financially unbalanced as it will be more exposed to sudden changes in regulation or customer habits. This requires a comprehensive understanding of our client’s ecosystem, from its supply chain to its own clients.

Our focus is on leveraging both data and the unparalleled expertise of our teams to manage risks effectively. With our understanding of climate models and industry landscape analysis, we can provide insights into a company's decarbonization trajectory and recommend best practices. And with our clear sustainable commitments, we aim to encourage our customers to embrace a clear transition pathway. Our initial focus in on heavy emitters like steel, cement, chemicals and construction. We are researching their pathways to net-zero to be able to project their change in need such as technology, supplier, trade routes. By doing so we are building solutions to address their needs as their reliable trade partner, and increasing our capacity within teams for the ability to underwrite all these novelty with confidence.  

We are confident in the effectiveness and benefits of our decarbonization pathway. Looking ahead, we are convinced that our decarbonization framework will not only help us meet new regulatory standards and non-financial reporting requirements, but also enable us to support our customers’ own transitions.

ESG integration can be challenging for trade credit insurance, but we pledge to communicate what is at stake to the industry at large. When it comes to sustainability, we aim to lead by example by implementing clear targets and measurement systems which will guide us towards Net Zero in 2050. 

Alexis Garatti 

Senior climate change manager

Allianz Trade