Aviva Investors expands sustainable transition range with launch of Social Transition and Natural Capital Transition funds

(London) - Aviva Investors, the global asset management business of Aviva Plc, today launches two new funds designed to have a positive social and environmental impact, while delivering long-term capital growth for investors.

The Aviva Investors Social Transition Global Equity Fund and the Aviva Investors Natural Capital Transition Global Equity Fund are the latest additions to the Aviva Investors Sustainable Transition range, which is underpinned by the United Nation’s Sustainable Development Goals (SDGs). They follow the Aviva Investors Climate Transition Global Equities, European Equities, Global Credit and Real Assets Funds1, which aim to support and accelerate the transition to net zero.

The Funds will invest in companies that are managing their social and environmental impacts and providing solutions to support the transition to a sustainable future for both people and planet. Active ownership and macro stewardship are key parts of the strategy to drive change by engaging with companies in the funds, and with policymakers to reform markets.

Social inequality and biodiversity loss are major issues. The majority of the global population lives in countries where the wealth gap is growing and there has been a 68 per cent decrease in species populations between 1970 and 2016.2

Mark Versey, Chief Executive Officer of Aviva Investors, said:

“Aviva Investors is committed to the United Nation’s SDGs and to innovating sustainable, investable outcomes to achieve them. As well as growing their wealth, people want to know that their money is making a positive contribution to climate change, a fairer society and protection of the natural environment. The two objectives are equally important and aligned - we call this investing with purpose.

“There has, quite rightfully, been much focus on the path to net zero carbon emissions during the UN Climate Change Conference (COP26), but we should not forget that social issues and biodiversity are also important drivers of the transition to a fair and sustainable economy.

“Twenty one per cent of the global population lives in extreme or moderate poverty and only 27 per cent of global managerial positions are occupied by women.3 Furthermore, 14 of the 18 ecosystem services on which society depends have been degraded or are in decline.4 This is alarming because over half of global GDP is dependent on high functioning biodiversity and ecosystems.5

“The time to act is now.”

Social Transition Fund

Aligned with SDGs 5, 8 and 10, the Social Transition Fund will select investments that are changing their business models to respect human rights, promote decent working conditions and engage in responsible corporate behaviour. The Fund will also invest in companies that provide solutions towards improved access to education and health and wider financial inclusion. Businesses in breach of established social principles, or those involved in severe social controversies, will be excluded.

The Fund builds on the social transformation framework created by the World Benchmarking Alliance (WBA) to assess companies' social performance. The WBA is an initiative that Aviva helped create in 2018 to publicly rank companies’ performance on the SDGs and provides accountability mechanisms that create a race to the top on sustainability. The Fund will also donate 5bps of its management fee to social impact projects.

Natural Capital Transition Fund

Aligned to SDGs 12, 13, 14 and 15, the Natural Capital Transition Fund will invest in companies that provide solutions and are transitioning their business models across the themes of sustainable land, sustainable oceans, the circular economy and climate change. It will exclude firms involved in certain harmful activities or severe environmental controversies.

The launch coincides with the publication of Aviva’s biodiversity policy, which includes the commitment to use best efforts via engagement and stewardship to eliminate forest-risk agricultural commodity-driven deforestation activities at the companies in the Group’s investment portfolio and financing activities by 2025.

The Fund will also donate 5bps of its management fee to ecosystem restoration projects.

NGO EXPERIENCE AND PORTFOLIO MANAGEMENT TEAM

Portfolio Managers Julie Zhuang and Jonathan Toub and Senior Impact Analyst Eugenie Mathieu will manage the Natural Capital Transition Fund. The Social Transition Fund will be managed by Portfolio Managers Richard Saldanha and Matt Kirby and Senior Impact Analyst Vaidehee Sachdev.

Eugenie has over 20 years of experience in sustainability and advises the UK government on environmental issues as a member of the Council for Sustainable Business. She joined the firm in 2017 and worked previously as a campaign strategist for Greenpeace. Julie joined Aviva Investors in 2020 from UBS and Jonathan joined four years ago from Standard Life Investments.

Vaidehee began her career in 2013 and has focused on advocating for the human rights of workers and marginalised communities. Most recently at ShareAction, she led the development of the Workforce Disclosure Initiative, a corporate reporting framework. Richard has been with Aviva Investors for 14 years, managing a range of global equity portfolios. Matt has been with the firm since 2017.

NOTES TO EDITORS

Aviva Investors has been actively voting at company AGMs since the 1970s; was one of the first asset managers to publish its Corporate Governance Voting Policy in 1994; and was the first asset manager to formally integrate corporate responsibility into its voting policy in 2001.

Aviva Investors has been rated A+ by the UN PRI for Strategy and Governance every year since inception of this assessment in 2014 and was ranked second globally by ShareAction for its voting record on climate and social issues in 2020. In 2020, the firm, undertook 3,428 company engagements and voted on 72,025 resolutions at 6.457 shareholder meetings.

The firm this year introduced a 1.5 degree centigrade aligned engagement programme focused on 30 of the world’s worst carbon emitters, with an ultimate sanction of divestment if its expectations are not met over one to three years.

Aviva Investors’ collective activities include partnerships and lobbying through Climate Action 100, the Task Force on Climate Related Disclosures (TCFD), the Carbon Disclosure Project (CDP) and the Net Zero Asset Managers Alliance.

Aviva PLC this year announced its plan to become a net zero carbon emissions company by 2040, the most demanding target of any major insurance company in the world, as part of its plan to become the UK’s leading insurer, contributing to a sustainable economic recovery. Aviva was the first international insurer to go operationally carbon neutral in 2006.6

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Key risks

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 changesnin 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.

Important information

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