Investing in the social transition

The ‘S’ in ESG is multifaceted but can fundamentally be drawn back to the unequal distribution of human rights and resources – the right to a decent job and income, education, and access to healthcare. The socio-economic implications of inequality can impede growth and increase the risk of financial crises and poor public policy decisions, as well as fuel social unrest1

We believe investors can play a positive and influential role and capture a significant investment opportunity as markets increasingly price in the risks and opportunities of social inequality.

Our Social Transition Global Equity strategy targets opportunities aligned to the principles of the United Nations’ Sustainable Development Goals that support and benefit from the transition to a more socially equitable economy. We invest with an active, high-conviction approach to address the needs of investors seeking two objectives:

Long-term capital growth

Positive social outcomes

Our approach

We go beyond a simple approach of only investing in companies providing solutions to tackle inequality, to also invest in companies transitioning their business models towards a more socially equitable economy. Moreover, we seek to drive further positive change by engaging with investee companies and policymakers to tackle key market failures.

Transition focus

Our proprietary transition risk framework helps identify winners from the social transition across a wider opportunity set, increasing portfolio diversification. Our approach aims to deliver more resilient performance over the long term, uncover more alpha opportunities, and more effectively support the social transition.

Bespoke engagement

We engage with every company in the portfolio on specific social issues. Our three-year structured engagement programme systematically tracks all companies from leaders to laggards, with an escalation pathway that could ultimately lead to divestment if we are not satisfied with their progress. We believe this bespoke programme with teeth is the most effective way to support the social transition.

Macro stewardship

We have a longstanding track record in actively engaging with policymakers on market reform to correct material market failures. We have specific market reform initiatives relating to the transition to a more socially equitable economy that can help deliver positive social outcomes.

Investment opportunities in the strategy are linked to the following investment themes and aligned with the principles of the following United Nations Sustainable Development Goals:

Sustainable Development Goals

Transition themes

Respect human rights

Promote decent work

Responsible corporate behaviour

Solution themes

Access to education

Access to health

Access to finance

The social transition

Recognising that being a good corporate citizen is the right thing to do and pays off is something investors and the financial community need to think harder about, argue Vaidehee Sachdev and Matt Kirby.

Read more

Social Transition Global Equity strategy

Aviva Investors Social Transition Global Equity Fund

This strategy aims to deliver long-term capital growth by investing in companies globally that either provide solutions to social inequality or transitioning their business models to manage their social impact, while avoiding those that do not meet minimum social criteria.

Key risks

For further information on the risks and risk profiles of our funds, please refer to the relevant KIID and Prospectus.

Investment 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.

Emerging markets risk

The strategies invest in emerging markets; these markets may be volatile and carry higher risk than developed markets.

Social Transition Global Equity team

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Access key fund documentation and performance reports.

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Our views

1. Adapted from Dabla Norris (2015)