We consider voting to be an important part of the investment process and have had a formal and considered voting policy since 1994. We have explicitly incorporated corporate responsibility disclosure and performance into our voting since 2001 - being one of the first asset managers to do so globally.

Climate Change - BP vote demonstrates power of engagement

Aviva Investors, in collaboration with Hermes EOS, and Legal & General filed a shareholder resolution in May 2019, asking the management of BP to provide clarity on how the company’s strategy is consistent with the goals enshrined in the Paris Agreement. In so doing, the resolution required the company to include in its corporate reports (1) how it evaluates consistency of each new material capex investment with the Paris goals (2) to review its financial and non-financial performance metrics and targets to ensure that these reflect the aims of the Paris climate agreement and (3) to report on progress against on an annual basis.

The most important strategic conundrum facing the oil and gas industry today is climate change.  The science makes it undeniably clear; most greenhouse gas emissions are caused by human activity, including the burning of fossil fuels. Recognition of this reality thus requires fundamental changes to our energy system if we are to meet the Paris goals of limiting global heating to "well below 2°C". Companies, such as BP, sit at the core of this conundrum, but could potentially offer the right solutions in advancing a transition to a low-carbon future. The oil and gas industry can make or break the goal of the Paris Climate Agreement and investors therefore need to understand to what extent oil companies are misallocating capital for green or brown field growth projects whose economics are at risk under different lower carbon scenarios. To mitigate this risk, shareholders need assurance that firms have a long-term transition strategy to diversify their business lines.

BP's limited climate risk disclosures in the past have made it difficult for investors to either confirm or deny the company's alignment of its hydrocarbon investments with the Paris Agreement. Although BP is boosting investment in its renewable-energy business, it is also planning on expanding oil and gas production. The resolution, which Aviva Investors co-sponsored with Hermes and L&G, requires the company to evaluate whether each new fossil fuel project is consistent with the Paris Agreement. It aims to keep the rise in global temperature this century well below two degrees Celsius above pre-industrial levels and to pursue efforts to limit the temperature increase even further to 1.5 degrees Celsius. The resolution was driven by a concern the company was disclosing insufficient information to enable investors to appraise whether its strategy – particularly those planned investments in fossil fuel reserves – was consistent with the Paris goals being met. That was in turn making it difficult to weigh up the long-term investment case.

In the course of many months leading up to the AGM, Aviva Investors engaged with BP's senior leadership team on the precise requests of the resolution with the aim of securing the support of the company's management.

The climate resolution, proposed by Aviva Investors alongside members of investor group Climate Action 100+ and backed by the BP board, was passed with 99.14% of the vote at BP's annual general meeting. This marked an unprecedent level of shareholder support for a climate-related resolution and signalled a clear demand for greater disclosure about how BP intends to align its business with the Paris climate goals. The challenge now upon BP is to demonstrate to what extent its capital expenditure falls in line with what the Paris Agreement dictates and how it assesses the strength of its targets and performance indicators to achieve this. Aviva Investors, in collaboration with CA 100+ investors, has since further engaged the company in implementing the demands set out in the resolution and will continue to do so.

Note: Company names shown are for informational purposes only. This is not an offer to sell, nor a solicitation to buy, securities.

Unilever – Targets to halve its use of virgin plastic highlight the power of shareholder voice. 

When we met CEO Alan Jope in July, we shared our view that the company’s existing targets on plastic were outdated and unambitious given the rapid change in public mood on the issue. We also engaged with the company this year in collaboration with other investors as part of the Plastic Solutions Investor Alliance coordinated by a US NGO called ‘As You Sow’, which targeted Unilever, Pepsico, P&G and Nestle. Whilst Unilever’s move is clearly a result of the upswell of public opinion since David Attenborough’s Blue Planet programme, as well as new legislation on this issue, we’re proud that our voice as a key shareholder working alongside other investors can be part of driving the change.

Unilever CEO Alan Jope said there was "no paradox" between sustainable business and better financial performance. "We profoundly believe that sustainability leads to a better financial top and bottom line." 

Unilever, the company behind brands such as PG Tips, Domestos and Hellmans, announced plans to halve the amount of virgin plastic it uses. This commitment makes Unilever the first major global consumer goods company to commit to an absolute plastics reduction across its portfolio. They plan to slash new plastic use over the next five years by using more recycled plastic and finding other alternative materials – including selling toothpaste that comes in chewable tablets, among other things. They’ve also committed to reduce the amount of plastic packaging it produces annually by about 14 per cent by 2025 across all its brands from Dove soap to Lipton tea. The company’s new pledges complement two earlier ones to use 25 per cent recycled plastic in its packaging and to make all plastic packaging reusable, recyclable or compostable by 2025. 

Key parts of the plastic strategy include:

  • Multiple use packs (reusable and/or refillable)
  • ‘No plastic’ solutions (alternative packaging materials or naked products)
  • Reducing the amount of plastic in existing packs (concentration) Replacing non-recycled plastic packaging with recycled plastics
  • Product innovation is a key part of solving the problem. As part of a pilot that launched earlier this year, Unilever will soon begin selling toothpaste that comes in chewable tablets so it avoids the need for hard–to–recycle plastic toothpaste tubes.

The move follows similar announcements by several other companies, most notable Procter &Gamble and Nestle. Procter & Gamble which makes Fairy and Lenor – said in April that it planned to halve the amount of plastic it used by 2030. Nestle announced that it would phase out all non-recyclable plastics from its wrappers by 2025.

Note: Company names shown are for informational purposes only. This is not an offer to sell, nor a solicitation to buy, securities.

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