Aviva Investors targets net-zero by 2040

Aviva has pledged to reach net-zero across its operations, supply chain and financing activities by 2040, in what it claims is the most ambitious net-zero pledge from a large, UK-based financial services firm.

Aviva Investors targets net-zero by 2040

Aviva's approach for financed emissions includes a mix of divestment and engagement

Announced today (1 March), the new climate targets cover Aviva’s Scope 1 (direct), Scope 2 (power-related) and Scope 3 (indirect) emissions, including assets where Aviva has control over decision-making.

Aviva has admitted that reaching net-zero financed emissions and decarbonising the supply chain will be a longer and more challenging process that delivering net-zero emissions. The firm has already cur operational emissions by 66% since 2010 and believes a transition to 100% renewable electricity and an electric fleet will accelerate progress.

To that end, it is planning to reduce the carbon intensity of its investments by 25% by 2025, rising to 60% by 2030. It will achieve this reduction through a mix of divestment and engagement; all companies which make more than 5% of their revenue from ‘unconventional fossil fuels’ like oil sans will be divested from this year, and the same rule will apply to coal by the end of 2022.

Money divested from fossil fuels will be invested in greener assets. Aviva is aiming to invest £10bn of assets for auto-enrolment default funds and other popular funds into low-carbon projects by the end of 2022. Around half has already been allocated, with projects benefitting including renewable electricity generation and energy efficiency.

At the same time, all high emitting companies in holdings will be encouraged to set science-based targets and disclose risks in line with the Taskforce on Climate-related Financial Disclosures (TCFD) recommendations. 30 oil and gas, metals and mining and utilities firms have already been given this advice.

“If Aviva Investors does not see evidence of serious engagement from companies to meet the climate challenge, it will put them on the stop-list and divest itself of any assets it holds,” the firm said in a statement.

The new targets were confirmed in an update from Aviva’s group chief executive Amanda Blanc, which reads: “We have always taken our responsibilities to society seriously, but the reality of the threat [climate change] has mandated that this become a key strategic issue for us as a company, as it should be for all companies.

“Our ability to perform as a business is entirely dependent upon societies and economies being able to operate effectively and that will become increasingly impossible if climate change, and our role in accelerating it, is left unchecked.”

The announcement from Aviva has been welcomed by both the UK’s COP26 unit and the Make My Money Matter Campaign, which was set up to promote alignment with net-zero across the UK’s financial services sector.

Increased focus

The announcement from Aviva comes just weeks after it warned companies that it invests in that it would announce new climate plans.

Some parts of its business, including its £47.3bn Real Assets Platform, were already targeting net-zero ahead of the UK’s legal deadline of 2050.

The investing giant has previously lobbied for Ministers to include a requirement that all auto-enrolment default pension funds are net-zero aligned in the Pension Schemes Bill – a move also backed by the likes of ShareAction.

The Bill has since passed without this clause.  The Bill’s main climate provision is a new mandate requiring large pension schemes to disclose the climate-related risks posed to assets in their portfolios by the end of 2022, in line with TCFD recommendations.

Sarah George

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