Aviva Investors announces climate transition engagement programme with commitment to divest from non-responsive companies

(London) - Aviva Investors, the global asset management business of Aviva Plc, today announces its Climate Engagement Escalation Programme, focused on its investments in 30 ‘Systemically Important Carbon Emitters’.

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The investment firm will require these companies to deliver net zero scope 3 emissions by 2050 and establish robust transition roadmaps to demonstrate their commitment to immediate action on climate change as the world’s carbon budget diminishes. 

Aviva Investors considers climate change to be the greatest systemic challenge facing society, global economies, and companies. Failure to act will have catastrophic and pervasive consequences, including for capital markets and asset valuations.

The programme will run for between one and three years, depending on individual company circumstances, and incorporate clear escalation measures for non-responsive businesses or those that do not act quickly enough. Aviva Investors is committed to full divestment of targeted companies that fail to meet its climate expectations. Divestments will apply across the firm’s equity and debt exposures. 

Mirza Baig, Global Head of ESG Research and Stewardship at Aviva Investors, said:

“Aviva Investors’ ESG philosophy promotes the relative merits of engagement over divestment as the more effective mechanism of delivering positive change and outcomes for our clients and society. Engagement provides us the opportunity to partner with companies as they navigate the challenges of transition. However, for our engagement approach to have impact, it must be accompanied by a robust escalation process, including the ultimate sanction of divestment.”

The engagement programme includes companies from the oil and gas, metals and mining and utilities sectors that substantially contribute to total global carbon emissions. Its stipulations include the adoption of science-based targets covering the full carbon footprint of the businesses, the reframing of corporate strategies, business plans and capital frameworks, adjustments to management incentives and lobbying activities.  

The responsiveness of the companies in scope will be determined by a qualitative assessment of progress against Aviva Investors’ climate engagement framework1 and quantitative improvements against the firm’s proprietary climate transition risk model. 

Progress will be monitored on a six-monthly basis, at which point Aviva Investors will determine the need for escalation. This may include votes against directors, the filing of shareholder proposals, and working with aligned stakeholder groups to apply further pressure. Companies that fail to make sufficient progress at the conclusion of the programme will trigger full divestment across Aviva Investors’ equity and credit portfolios. 

David Cumming, Chief Investment Officer for Equities at Aviva Investors, said:

“Active investment and engagement are key to promoting company transition and solutions to the climate crisis. This approach has the complete backing of our investment teams. By fully integrating our approach across stewardship and the investment teams, we will be able to maximise our ability to influence the companies we have targeted towards positive climate strategies.”

Colin Purdie, Chief Investment Officer for Credit at Aviva Investors, said: 

“Creditors have an increasingly important role to play in helping to deliver climate change mitigation and transition, as well as addressing wider ESG concerns. Pockets of green finance do not go far enough. Creditors must act decisively and collaboratively to embed sustainable principles across the market, from large public companies to smaller, private high-yield issuers. Credit markets are a potentially powerful but largely untapped force that could exert significant influence on companies through the billions of dollars of debt financing they provide. Cases where creditors can act together with shareholders, as we do at Aviva Investors, can be particularly powerful.”

For more information contact:

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Victoria Howley

Media Relations Manager

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Steve Ainger

Head of Media Relations

Important Information:

 

The information and opinions contained in this document are for use by the financial press and media only. No reliance may be placed for any purpose on the information or opinions contained in this document nor should they be seen as advice. 

The press release is provided on the basis that Aviva Investors Global Services Limited is not causing the communication of a financial promotion under exemption of the Financial Promotion Order, as Aviva Investors Global Services Limited has no control over the way in which an article based on this press release is prepared and published by the financial press and media. 

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (“Aviva Investors”) as at 1 February, 2020. Unless stated otherwise any views, opinions expressed 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.  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. 

Issued by Aviva Investors Global Services Limited, registered in England No. 1151805.  Registered Office: St Helen's, 1 Undershaft, London, EC3P 3DQ   Authorised and regulated by the Financial Conduct Authority.

AVIVA INVESTORS

Aviva Investors is the global asset management business of Aviva plc. The business delivers investment management solutions, services and client-driven performance to clients worldwide. Aviva Investors operates in 14 countries in Asia Pacific, Europe, North America and the United Kingdom with assets under management of £355 billion in assets as at 30 June 2020

AVIVA PLC

Notes to editors

• For information on how Aviva is helping our people, customers and communities impacted by COVID-19 visit: www.aviva.com/covid-19-our-response/ 

• We exist to be with people when it really matters, throughout their lives – to help them make the most of life. We have been taking care of people for more than 320 years, in line with our purpose of being ‘with you today, for a better tomorrow’.

• In 2019, we paid £33.2 billion in claims and benefits on behalf of our 33.4 million customers. 

• Aviva is invested in our people, our customers, our communities and our planet. We were the first international insurer to go operationally carbon neutral in 2006, we have invested £6bn in green assets since 2015 and we are a member of the UN Net Zero Asset Owner Alliance.

 • Aviva is a Living Wage and Living Hours employer and provides market-leading benefits for our people, including flexible working, paid careers leave and equal parental leave. Find out more at www.aviva.com/social-purpose 

• We will focus on the UK, Ireland and Canada where we have leading market positions and significant potential. We will invest for growth in these markets. Our international businesses in Europe and Asia will be managed for long-term shareholder value. We will also transform our performance and improve our efficiency. Our transformation will be underpinned by managing our balance sheet prudently, reducing debt and increasing our financial resilience.

 • Total group assets under management at Aviva group are £522 billion (HY20) and our Solvency II capital surplus is £11.8 billion (Q320). Our shares are listed on the London Stock Exchange and we are a member of the FTSE 100 index. 

• For more details on what we do, our business and how we help our customers, visit www.aviva.com/about-us 

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