Engaging with investee entities and (with corporates) using the right to vote at Annual General Meetings to benefit clients and potentially society as a whole.
As asset manager’s Principal Adverse Impacts Statement demonstrates the impact that investment decisions have on sustainability factors.
Article 6, 8 & 9 funds
Classification under the EU’s Sustainable Finance Disclosure Regulation (SFDR) framework for disclosure of investment funds’ sustainability characteristics.
Aviva Investors' Enhanced Exclusions (incl. UNGC)
Removing securities from a fund’s investible universe due to their failing to meet certain revenue thresholds. The enhanced baseline policy covers the existing controversial weapons and civilian firearms categories and adds tobacco, thermal coal, unconventional fossil fuels and an assessment of UNGC controversies. The latter is a judgment made by Aviva Investors, informed by data from MSCI. The enhanced baseline exclusion policy is being implemented over the course of 2022.
Best in class
An investment approach that aims to identify companies or sovereigns with strong ESG characteristics relative to peers. Can include top or exclude worst performers.
The variety of life on earth. Often used interchangeably with ‘nature’.
Carbon capture and storage (CCS)
Technology that captures carbon dioxide before it is released into the atmosphere by industrial processes. It captures, transports and then permanently stores CO2.
In a portfolio context - the value of shares held over company market cap, multiplied by total carbon emissions for the company, to give emissions “owned”.
An entity’s carbon emissions, typically divided by its revenues, though the denominator can also be square meter, per employee, unit of production, etc.
Achieving parity between carbon emissions and removals. Easier to achieve than ‘net zero’ as it allows others to emit less CO2 on your behalf (known as an offset).
Compensating for emissions by paying for equivalent carbon removal by others.
Putting a price on emissions of greenhouse gases to “make the polluter pay”.
Nature-based or industrial solutions that capture and store carbon.
Finding ways to reduce waste and pollution and keeping products and materials in use rather than throwing them away.
Any technology that reduces or eliminates a pollutant, whether climate related or not.
Long term changes in average global conditions, such as temperature and rainfall, due to the accumulation of greenhouse gases in the Earth’s atmosphere.
Climate Engagement Escalation Programme
Aviva Investors 2021-2024 programme, focused on engaging with thirty of the largest carbon emitters globally, aiming for establishment of robust transition roadmaps to net zero scope 3 emissions by 2050.
The transition to a warmer, low carbon world.
Cash donations, project costs and donations in kind (such as the cost of volunteering) to charitable organisations in a company’s local areas, or potentially in areas where communities are impacted by production or use of a company’s products.
Issues of investor concern across environmental, social or governance areas.
CO2e (or CO2-eq)
CO2 equivalent – metric used to convert global warming potential of other greenhouse gases into a comparable format.
26th conference of the parties to the UN Framework Convention on Climate Change.
The systems and processes by which companies are controlled.
Corporate good governance process
Aviva Investors’ qualitative assessment of corporations and their governance practices, which aims to ensure governance practices are in-line with national governance standards. We will avoid investments in companies that fail to protect the basic rights of investors and employees, or are involved in tax evasion, corruption or other governance scandals (and fail to take adequate remedial action). This is assessed qualitatively as part of Investment analyst research note using a combination of MSCI governance + controversies data points and our knowledge of the company.
Work that, amongst other things, is productive and delivers a fair income, security in the workplace and social protection for families.
A look-through of constituents underlying the derivative financial instruments to ensure the indirect exposure to excluded entities is limited to a maximum percentage threshold as part of Aviva Investors’ Article 8 process.
Selling securities – in an ESG context, often after engagement efforts have failed.
Emissions trading scheme (ETS)
Market-based system for reducing the amount of greenhouse gases emitted by industrial businesses.
Contact between an asset manager and investee entity on matters relating to ESG factors with the aim of improving practice, disclosure or both.
The process through which investors can apply increasing levels of pressure on companies, beyond initial engagement but prior to divestment.
Umbrella term for environmental, social and governance issues.
Using moral principles as the initial filter for the selection of investible securities.
Removing securities from a fund’s investible universe due to their failing to meet certain criteria.
Definitions vary, but generally this is a label applied to funds that have some form of fossil fuel exclusion that screens out companies in key sectors.
Global Warming Potential
From a climate science perspective, GWP was developed to enable a comparison of warming impacts of different greenhouse gases.
Bonds with proceeds exclusively used to finance / re-finance green projects.
Investments used to finance activities with environmental benefits.
Greenhouse gases (GHG)
Gases including carbon dioxide and methane that trap some of the heat the earth radiates back out into space, leading to the earth being warmer than it otherwise would be.
Falsely claiming or exaggerating sustainable characteristics or environmental benefits provided by a fund, business practice or company. “Rainbowwashing” is the same idea, with regards to use of the Sustainable Development Goals.
Human rights are the basic rights and freedoms that belong to every person in the world, from birth until death as set out by the Universal Declaration of Human Rights, adopted by the UN General Assembly in 1948. Countries and companies are compelled to respect and protect them.
Human rights due diligence
Human rights due diligence is a way for organisations to proactively manage potential and actual adverse human rights impacts with which they are involved.
In essence an impact investment or impact fund needs to meet three key criteria. Firstly, showing intentionality to have a positive impact. Secondly, identifying additionality to ensure the investment is adding a positive impact that wasn’t there in the first place. Thirdly, measuring the impact both quantitatively and / or qualitatively.
Aviva Investors’ transition philosophy is based on investing in companies and improving their ESG credentials (“turning brown to green”) through stewardship activities whilst integrating ESG into the investment and risk-management processes.
Intergovernmental Panel on Climate Change (IPCC)
A UN body consisting of the world’s top climate scientists and related experts.
International Platform for Climate Finance (IPCF)
An Aviva Investors-led proposal to transition finance to support the Paris Agreement and ensure that markets amplify – rather than undermine – global climate goals.
While the shift to a low carbon economy will likely boost prosperity and create jobs, there will be transitional challenges (particularly social ones), which responsible investors can help to address.
The Ethical Trading Initiative defines the living wage as one that is enough to meet basic needs and to provide some discretionary income.
Engaging with governments, regulators and supranational organisations with the aim of seeking correction of market failures and mitigation of systemic risks to put markets on a more sustainable footing.
See active ownership
The world's stock of natural assets including all living things, soil, air, water and geological assets.
Net Zero Asset Owner Alliance
A UN-convened group of institutional investors who have committed to transitioning their investment portfolios to net zero GHG emissions by 2050.
Net Zero Asset Managers Initiative
A UN-convened group of asset managers who have committed to transitioning their investment portfolios to net zero GHG emissions by 2050.
Net Zero target
Net zero is achieved by reducing the level of GHG emissions a company or country creates to as close to zero as possible, with any residual amounts emitted matched by removal.
Excluding securities from an investment universe due to a lack of compliance with established international standards e.g. human rights.
Negative emissions technologies
Technologies that enable carbon to be removed from the atmosphere e.g. machines that capture carbon dioxide from the air and sequester it.
Breakthrough international treaty on climate change adopted at COP21, Paris, 2015.
Science-Based Targets Initiative (SBTi)
Respected international body that accredits corporate targets on climate with being science-aligned (i.e. with the Paris Agreement goal of limiting warming to 1.5 degrees Celsius).
Scope 1, 2 and 3 emissions
Categorisation of GHG emissions into where they are emitted along a company’s value chain: Scope 1 - direct emissions, scope 2 - indirect emissions from the generation of purchased electricity, scope 3 - other indirect emissions e.g. in supply chain or by customers’ use of product.
Using filters to decide which securities are eligible or ineligible for investment.
Bonds with proceeds exclusively used to finance / re-finance social projects.
Facilities that support social services such as healthcare and education.
A scheme of classification that establishes a list of socially sustainable economic activities, as currently being produced by the EU.
Sovereign ESG Assessment (inc. good governance)
Aviva Investors’ assessment of sovereigns’ ESG characteristics using the firm’s proprietary sovereign ESG model, external data, and qualitative judgements from in-house ESG specialists.
The responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries, leading to sustainable benefits.
A stranded asset is anything, e.g. a piece of equipment or a resource, that once had value or produced income but no longer does. This is usually due to some external change, including developments in technology, markets or societal habits.
All activity that meets the needs of the present generation without compromising the ability of future generations to meet their needs.
Bonds with proceeds exclusively used to finance / re-finance sustainability projects.
Sustainable Development Goals (SDGs)
17 global goals agreed by members of the UN, designed to be a “blueprint to achieve a better and more sustainable future for all”.
Sustainable Finance Disclosure Regulation (SFDR)
A set of European Union rules that came into effect on March 10, 2021, with the goal of making the sustainability profile of funds more comparable and easier for investors to understand.
A scheme of classification that aims to enhance transparency concerning sustainable activities.
A type of unconventional fossil fuel that accounts for significantly higher emissions per barrel than conventional oil.
The Task Force on Climate-related Financial Disclosures – created to increase and improve corporate reporting of climate-related financial decision-making information.
More commonly referred to as just “coal.” Distinct from coking / metallurgical coal, which has a higher energy content and is used to make iron and steel.
Unconventional fossil fuels
Typically refers to oil / tar sands, shale oil & gas, deepwater oil and Arctic oil.
UN Global Compact (UNGC)
A corporate sustainability initiative that calls on businesses to align with universal principles on ESG issues and to take action to advance broader societal goals. Investors can use the UNGC for investment by determining whether companies are following them or in breach.
UN Guiding Principles on Business and Human Rights (UNGP)
The UN Guiding Principles on Business and Human Rights are a set of guidelines for States and companies to prevent, address and remedy human rights abuses committed in business operations. They are also called the Ruggie Principles and were created in 2011.