Aviva Investors pushes for change among carbon-emitters in its portfolio investments

THE global asset-management arm of insurer Aviva has unveiled a programme that will focus on engaging its investments in 30 "systemically important carbon emitters" on climate matters, and committed to divesting from non-responsive companies.

Aviva Investors said in a statement on Wednesday that the Climate Engagement Escalation Programme includes companies from the oil and gas, metals and mining and utilities sectors that substantially contribute to total global carbon emissions.

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".

Requirements 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, as well as adjustments to management incentives and lobbying activities.

Mirza Baig, global head of ESG (environmental, social, and corporate governance) 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.

"However, for our engagement approach to have impact, it must be accompanied by a robust escalation process, including the ultimate sanction of divestment."

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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 said.

It will monitor companies' progress on a six-monthly basis, and determine the need for escalation, which 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," the firm said.

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.

"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."