Investing in the climate transition
We believe that the risks and opportunities associated with climate change demand urgent action, as limiting its impacts is imperative not only for protecting the environment but also for ensuring long-term economic growth and stability. Addressing climate change by transitioning to a low-carbon economy can mitigate systematic risks, unlock new opportunities and create more resilient markets. Companies that efficiently manage their effect on climate change and adapt to these challenges are better positioned to thrive in this evolving landscape, presenting an opportunity to deliver sustainable value over the long term.
Aviva Investors Global Climate Credit Strategy targets bonds from two types of companies:
Solutions: Companies providing goods and services that help mitigate and adapt to climate change.
Operations: Companies adjusting their business models to be resilient in a warmer climate and adaptable to a low-carbon economy.
It also invests in:
Green, Social, and Sustainability Bonds: Bonds funding projects with positive environmental, social, or sustainability benefits.
Sustainability-Linked Bonds: Bonds tied to achieving key performance indicators that promote positive environmental, social, or sustainability outcomes.
Generate income and long-term capital growth
Alignment with a net-zero emissions pathway by 2050
Our approach
We seek to identify the potential winners from the transition across a broad range of sectors. First, we apply our firm-wide baseline exclusions policy and Paris-Aligned Benchmark (PAB) exclusions. We then invest in debt securities of companies either providing solutions for climate change, or companies aligning their operations to be resilient in a low-carbon economy. Furthermore, we leverage our scale and influence and engage with portfolio companies to accelerate progress. We believe this approach has the potential to provide the following benefits: long-term capital growth and resilience across market cycles while seeking to support the climate transition.
Bespoke climate approach
All sectors of the economy will be impacted by climate change, hence we don’t just invest in ‘Solutions’ companies whose products and services aim to mitigate or adapt to climate change, we go beyond that to also invest in ‘Operations’ companies that are aligning their business models to be resilient in a warmer climate and adaptable to a low-carbon economy. This can help maximise the strategy’s potential to deliver consistent, long-term outperformance as part of a core investment grade allocation.
Robust portfolio construction
Viewed as an independent source of persistent alpha in both risk-on and risk-off credit markets. Our portfolio construction approach emphasises disciplined risk management and a beta-neutral strategy. This method prioritises downside protection, mitigating aggressive drawdowns and sudden spread blowouts, while targeting high-conviction security and sector opportunities. By focusing on credit alpha rather than beta, the approach enhances excess returns and optimizes risk allocation, making the portfolio resilient to market volatility and macroeconomic uncertainties. Our aim is to achieve consistency designed to perform well across various market conditions, ensuring long-term growth and stability.
Connected across capabilities
Our team and process draws on the expertise of our full fixed income team, as well as our sustainable investment team. This allows us to allocate to the most attractive opportunities, regardless of currency, from issuers around the world. Our sustainable investment team also supports us with our bespoke engagement programme which asks the companies in which we invest to adopt science-based targets. These science-based targets provide a clearly defined pathway to reduce greenhouse gas emissions in line with the Paris Agreement and helps the funds alignment with a net-zero emissions pathway by 2050.
Key risks
Investment risk and currency risk
The value of an investment and any income from it can go down as well as up and can fluctuate in response to changes in currency and exchange rates. Investors may not get back the original amount invested.
Credit and interest rate risk
Bond values are affected by changes in interest rates and the bond issuer's creditworthiness. Bonds that offer the potential for a higher income typically have a greater risk of default.
Illiquid securities risk
Some investments could be hard to value or to sell at a desired time, or at a price considered to be fair (especially in large quantities), and as a result their prices can be volatile.
Counterparty risk
The Strategy could lose money if an entity with which it does business becomes unwilling or is unable to meet its obligations to the Strategy.
Derivatives risk
Derivatives are instruments that can be complex and highly volatile, have some degree of unpredictability (especially in unusual market conditions), and can create losses significantly greater than the cost of the derivative itself.
Sustainability risk
The level of sustainability risk may fluctuate depending on which investment opportunities the investment manager identifies. This means that the fund is exposed to sustainability risk which may impact the value of investments over the long term.
Global Climate Credit team
Justine Vroman
Senior Portfolio Manager
Thomas Chinery
Senior Portfolio Manager
Climate change views
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Climate Stewardship 2030 programme
29 Apr. 2025
Designed to support our holistic stewardship approach, Aviva Investors adopted its Climate Stewardship 2030 programme (CS30) in 2024.
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The tipping point for climate finance: Making financial flows consistent with the Paris Agreement
29 Nov. 2023
Transition plans, including from governments in response to the Global Stocktake, will be crucial to bring about the shift to a low-emissions, climate-resilient world. Markets need clear implementation signals to align capital with the goals of the Paris Agreement. Our in-depth report calls for the creation of a transition-plan ecosystem connecting all levels of the global economy.
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Confronting a permacrisis? The intersection between antimicrobial resistance, climate change and biodiversity loss
23 Nov. 2022
Will a warmer and less biodiverse world give pathogens new opportunities, and do we have the tools to confront disease? This report discusses the complex intersection of three planetary crises and calls for urgent action to slow resistance to antimicrobial drugs – an obvious public health emergency.
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The levers of change: A systems approach to reconcile finance with planetary boundaries
13 Sep. 2022
Financial services underpin all economic activity, which itself depends on Earth’s natural capital. Resolving their interconnected issues to bring about a just transition will require a holistic, systems-thinking approach.
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A tragedy of perception: Fixing the ESG blind spots in business, finance and economics
8 Sep. 2022
A distorted sense of reality has caused us to disregard sustainability concerns when modelling economies, companies and finance. We can no longer ignore such material issues just because they are too hard to fathom. This is where systems thinking comes in, explains Steve Waygood.
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Redefining stewardship: Why stakeholder capitalism needs to wake up
31 Aug. 2022
Asset managers and other financial institutions have a duty to act in the best interests of their customers and society. Macro stewardship will be crucial to meeting these responsibilities, argues Mark Versey.
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Know your limits: An interview with Nafeez Ahmed
29 Aug. 2022
Warnings that natural systems are close to breaking point are not new – but how will we respond? Combining what we know with existing technologies could offer a remarkable opportunity to rethink our world, as Nafeez Ahmed explains.
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The burning issue: Avoiding ESG fatigue
25 Aug. 2022
How can we face existential problems and stay positive? Abigail Herron contemplates simple steps to protect momentum and avoid burnout.
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Strategies to change the financial system: An interview with Natalie Mangondo
16 Aug. 2022
Can society reform the system that has enabled growth but simultaneously brought the long-term health of the planet into question? UN Climate Change High Level Champions Finance Youth Fellow Natalie Mangondo contemplates choices and change with AIQ.
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Our annual letter to company chairpersons
24 Jan. 2022
As a key part of our engagement efforts, every January we send a letter to the chairs of companies we invest in (and some we don’t, but still want to use our influence with) to set out our stewardship priorities for the year. Here, in full, is our 2022 letter.
