As 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 2021 letter.

After a period of crisis, it is essential that we collectively reflect and grasp the opportunities to reposition our businesses, economies and societies on a more sustainable footing. In that spirit, the following are some of our key observations on recent events, which have helped shape our stewardship priorities for the coming year:

  1. Stakeholder capitalism is a reality not an ideal – companies simply do not have a business without their suppliers, employees, partners and customers. Therefore, building stakeholder-centric business models is a commercial imperative.
  2. To tackle a systemic risk such as Covid-19, the global response needed to be proportionate, coordinated and immediate. There are clear parallels with what is required to confront the looming climate and biodiversity emergency. Any further delay in collective and individual climate action and efforts to protect rapidly depleting natural resources could prove catastrophic.    
  3. The crisis shone a spotlight on deep-rooted and longstanding societal challenges, most notably social exclusion and inequality. Given businesses’ role and influence in society, it is not acceptable that companies perpetuate systemic social problems by operating within the confines of the status quo. Instead, companies must embrace their responsibility to act as positive agents of social change.
  4. The most resilient companies during the crisis had dynamic leadership teams and corporate cultures that enabled their businesses to adapt quickly and efficiently. The effectiveness of boards and management teams will increasingly be judged on their agility in successfully navigating cyclical and structural change.

We have outlined below the key issues that will guide our engagement activities, voting intentions and ultimately our investment decisions.

1. Stakeholder business models

Our expectation is that companies will define a corporate purpose that transcends a narrow focus on immediate shareholder returns

Businesses must ensure there is a clear link between its stated corporate purpose, strategy, stakeholder welfare and board decision making.

Our expectation is that companies will:

  • Define a corporate purpose that transcends a narrow focus on immediate shareholder returns;
  • Identify key stakeholders and create a value proposition for each group, ensuring compliance with international human rights frameworks as a minimum baseline;
  • Build corporate strategy and business plans to maximise multi-stakeholder value generation;
  • Identify, set targets, monitor and report against key stakeholder performance indicators.

2. Diversity and social inclusion

The balanced representation of board directors with respect to gender, ethnicity, and social backgrounds is a critical business issue, one that is essential for ensuring a deep understanding of key stakeholders and securing the best available talent. (We view diversity through the broadest lens, including disability and sexual orientation).

Companies have a responsibility to actively promote social inclusivity

Additionally, companies have a responsibility to actively promote social inclusivity and help break down rather than reinforce social barriers.

Our expectation is that companies will:

  • Appoint at least one racially and ethnically diverse director to the board;
  • Develop a strategy to increase the number of ethnically and socially diverse employees in senior management and report against targets;
  • Publish ethnicity data, including ethnic pay gaps, to facilitate external monitoring of progress;
  • Build a more inclusive work culture through targeted programmes such as reverse mentoring and cultural awareness initiatives;
  • Proactively support minority owned businesses within supply chains.

3. Executive remuneration

Sharing the burden of austerity is essential in maintaining staff morale and engagement

Boards should show restraint when determining executive pay during periods of low wage inflation, cost-cutting initiatives and when there has been a significant erosion in stakeholder value. A strong tone from the top in sharing the burden of austerity is essential in maintaining staff morale and engagement.

Our expectation is that companies will:

  • Align executive management incentives with shareholder outcomes, whilst developing a clear framework for adjusting pay to reflect the experience of wider stakeholders;
  • Ensure management do not benefit from unjustified windfall gains at the point of vesting of long-term incentive awards, that are linked primarily to shifts in market sentiment;
  • Commit to paying employees at least the living wage;
  • Integrate robust and measurable strategic and operational sustainability targets (notably indicators linked to the climate transition) into variable incentive plans.

4. Climate change

We are aligned with the Intergovernmental Panel on Climate Change (IPCC) position that the world needs to limit the temperature rise to no more than 1.5 degrees Celsius above pre-industrial levels.

Our expectation is that companies will integrate climate goals into their business strategy and financial targets

We expect all companies to align with this ambition, and clearly articulate climate strategies and transition pathways that will deliver net zero emissions by the middle of the century. Climate plans must integrate biodiversity impacts and associated mitigation strategies.

Our expectation is that companies will:

  • Adopt a target to achieve net zero emissions by 2050 and commit to the Science Based Targets Initiative framework;
  • Integrate climate goals into their business strategy and financial targets, including their capex framework;
  • Publish a transition roadmap, including short- and medium-term climate targets and milestones;
  • Report on progress using the Taskforce on Climate-related Financial Disclosures framework (TCFD) and consider the option of providing investors with an advisory vote on the report.

5. Effective dynamic leadership

Companies that are slow to react to disruptive forces will not survive

All businesses and industries are experiencing disruptive forces linked to evolving regulation, technology, competition, consumer behaviours and sustainability expectations. Companies that are slow to react will not survive.

Our expectation is that companies will:

  • Ensure their boards and senior management teams have the right balance of skills and experience to identify, react and where appropriate drive industry disruption;
  • Foster a corporate culture that is dynamic, forward looking and embraces changes;
  • Be bolder in taking decisive action to revise corporate strategy, replace leadership teams, reorganise corporate structures or reallocate capital to maintain corporate competitiveness, regardless of short-term repercussions.   

We acknowledge the magnitude of these challenges and will evaluate companies on the strength of their commitments and ability to demonstrate progress over time. However, we will hold boards and individual directors accountable where the pace of change does not reflect the urgency required.

Our 2021 Global Voting Policy provides more details on our approach and perspectives on governance best practice. It is available on our website,

We welcome any feedback on the issues highlighted and our general stewardship approach. Please contact our responsible investment team at  

Yours sincerely,

Mark Versey

Chief Executive Officer
Aviva Investors

Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This material is not a recommendation to sell or purchase any investment.

In Europe this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK Issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: St Helens, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178. In France, Aviva Investors France is a portfolio management company approved by the French Authority “Autorité des Marchés Financiers”, under n° GP 97-114, a limited liability company with Board of Directors and Supervisory Board, having a share capital of 17 793 700 euros, whose registered office is located at 14 rue Roquépine, 75008 Paris and registered in the Paris Company Register under n° 335 133 229. In Switzerland, this document is issued by Aviva Investors Schweiz GmbH.

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The name “Aviva Investors” as used in this material refers to the global organization of affiliated asset management businesses operating under the Aviva Investors name. Each Aviva investors’ affiliate is a subsidiary of Aviva plc, a publicly- traded multi-national financial services company headquartered in the United Kingdom. Aviva Investors Canada, Inc. (“AIC”) is located in Toronto and is registered with the Ontario Securities Commission (“OSC”) as a Portfolio Manager, an Exempt Market Dealer, and a Commodity Trading Manager. Aviva Investors Americas LLC is a federally registered investment advisor with the U.S. Securities and Exchange Commission. Aviva Investors Americas is also a commodity trading advisor (“CTA”) registered with the Commodity Futures Trading Commission (“CFTC”) and is a member of the National Futures Association (“NFA”). AIA’s Form ADV Part 2A, which provides background information about the firm and its business practices, is available upon written request to: Compliance Department, 225 West Wacker Drive, Suite 2250, Chicago, IL 60606.

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