Our approach to responsible investment
Responsible investment isn’t just the right thing to do, it makes sound financial sense. That’s why we integrate environmental, social and governance considerations when we make investment decisions.
Following a number of successful engagements on this topic, including SOCO International and BP, we helped to launch a collaborative project to call on extractive companies to make ‘no go’ commitments in World Heritage sites. As part of this program we engaged with Chevron over plans to drill in the Great Australian Bight marine sanctuary.
This was of particular significance, given that more than 270 deep sea species previously unknown to science have been discovered in the region. Following our engagement, the company confirmed that they have abandoned oil exploration plans in the Great Australian Bight. We took great comfort in Chevron’s decision to exit the area, and continue to engage with companies and other key stakeholders in order to protect our global heritage.
Here are a few more cases when collaborative engagement made a difference.
Sustainable fisheries – resuscitating marine life
For over three decades, the world’s marine fish stocks have come under increasing pressure from fishing, loss of habitats and pollution. Illegal fishing and unreported catches further undermine fisheries management, while subsidies continue to incentivise unsustainable practices. Around 85 per cent of global fish stocks are now depleted or recovering from exploitation. Rising sea temperatures and increased acidity of the oceans are placing further pressure on already stressed ecosystems.
At stake is a multi-billion dollar global industry, one of the oldest in the world. For society, the destruction of a crucial source of food and income comes at a time when the global population is predicted to swell to 9.7 billion people by 2050. Positive engagement with management can steer investee companies towards more sustainable strategies that both improve business performance and aid the environment and society.
However, shareholders need to be able to ask the right questions of companies and press them for substantial answers. Aviva Investors, Sustainable Fisheries Partnership and the United Nations Principle of Responsible Investment launched a report designed to guide investor engagement with seafood companies.
We hosted an oversubscribed TED style teach-in for the investment community in conjunction with RI.com and Sustainable Fisheries Partnership on tools and initiatives available with a complete debriefing document subsequently distributed on World Ocean’s Day 2017.
Palm oil – addressing the burning questions
The palm oil industry has been considered a high-risk sector for over a decade due to poor corporate practices such as land grabbing, illegal deforestation and human rights abuses. This resulted in many companies along the palm oil supply chain facing legal action, fines, product boycotts and loss of clients.
In recent years, the issue has become even more “burning” given the unprecedented haze across South East Asia. Aviva Investors has engaged on palm oil for many years, including conducting site visits to Malaysia, Indonesia and Singapore in both 2016 and 2017. The 2016 trip was part of a 25-strong investor delegation that met with companies, small-holders, government officials and non-governmental organisations. We also met with some of the region’s leading banks to discuss the launch of a report providing guidance for lenders to the industry.
While many investors have become more familiar with the sector, its context and technicalities, we felt there was a need for a dedicated investor guide and upgraded ambition. In 2017, we built upon our partnership with the Zoological Society of London (ZSL), and membership of their palm oil technical advisory group, to publish a report highlighting current challenges in the palm oil industry and how investors can become agents of change.
Focusing on the palm oil investment case, the report outlines key questions that institutional investors should ask during their engagement with oil palm growers, traders and buyers, to help catalyse improvements in ESG practices along the value chain.
Joining forces for change
Aviva Investors actively works with other investors in the belief that collaboration is an important and sometimes essential requirement for exercising appropriate influence at companies. We also seek to share information and best practice so that we can collectively become a more powerful force for change.
We are founder members and active participants in a number of UK and international investor networks. These networks facilitate discussion through which individual institutions may decide to work collaboratively when appropriate.
The following are examples of initiatives and networks where Aviva Investors are active participants: