Multi‐asset ESG update: What have banks got to do with climate change?

In the first of a new regular series on how ESG considerations are integrated into our multi‐asset investment process, Shane O’Brien explains how consistent engagement with a well‐known UK financial institution led to a positive commitment on climate change.

Umbrella floating on water

Integrating environmental, social and governance (ESG) considerations is a core part of the investment process for our multi‐asset portfolios. In the first of what will be regular updates on how we’re doing this, we focus on our efforts to tackle the biggest, long‐term threat facing the planet, economies and financial markets: climate change.  

We have talked in the past about work we have done with companies like BP to press them to transition their business away from fossil fuels. This month, we look at perhaps a less obvious example of our engagement efforts to tackle this issue, with a look at the banking sector and our recent work with Barclays.  

The issue 

  • Barclays began 2020 as one of the worst‐performing European banks on climate change with no clear plan in place on how it can help address this issue.  
  • What does a bank like Barclays have to do with climate change? Quite a lot actually; it is one of the top lenders to huge fossil‐fuel projects. 

The action 

  • We initiated an intense period of engagement on the issue, including meeting the chairman on four separate occasions in 2020.  
  • We encouraged the bank to view this as an opportunity to establish a market‐leading climate strategy for the sector and shared our perspective on this would look like. 

The outcome 

  • Barclays took on board our suggestions and brought a new climate plan to its Annual General Meeting in May, which received 99 per cent shareholder support.  
  • Barclays has now committed to becoming the first major bank targeting net‐zero emissions across its entire financing activities, notably moving beyond the requirements of the original shareholder resolution. In the process, it has essentially gone from a climate change laggard to a leader.  
  • We continue to work closely with the bank as it develops a detailed climate framework and roadmap to achieve its ambitious objectives.

We hold Barclays within our MAF range. This is another example of why engaging  with companies to improve their ESG practices can be have far more impact than simple exclusion. We believe this is the right thing to do as it can really help drive significant change and lead to better outcomes for investors over the longer term. 

Key risks

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 exchange rates. Investors may not get back the original amount invested.

Important information

Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited ("Aviva Investors"). Unless stated otherwise any 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 can go down as well as up. Investors may not get back the original amount invested.

The Aviva Investors Multi‐asset Fund range comprises the Aviva Investors Multi‐ asset Fund I (“MAF I”), the Aviva Investors Multi‐asset Fund II (“MAF II”), the Aviva Investors Multi‐asset Fund III (“MAF III”), the Aviva Investors Multi‐asset Fund IV (“MAF IV”) and the Aviva Investors Multi‐asset Fund V (“MAF V”) (together the “Funds”). 

The Funds are sub‐funds of the Aviva Investors Portfolio Funds ICVC. For further information please read the latest Key Investor Information Document and Supplementary Information Document. The Prospectus and the annual and interim reports are also available on request. Copies in English can be obtained free of charge from Aviva Investors UK Fund Services Limited, St Helen’s, 1 Undershaft, London EC3P 3DQ. You can also download copies from our website.

Issued by Aviva Investors UK Fund Services Limited. Registered in England No 1973412. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119310. Registered address: St. Helen's, 1 Undershaft, London, EC3P 3DQ. An Aviva company.