Aviva Investors to divest from companies who fail to to comply with new climate programme.
Aviva Investors has announced its Climate Engagement Escalation Programme, focused on its investments in 30 ‘Systemically Important Carbon Emitters’.
The investment firm has announced a new climate initiative with commitment to divest from non-responsive companies. The 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.
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 is committed to full divestment of targeted companies that fail to meet its climate expectations. Divestments will apply across the firm’s equity and debt exposures.
The firm considers climate change to be the greatest systemic challenge facing society, global economies, and companies. Failure to act will have catastrophic and pervasive consequences, including for capital markets and asset valuations.
Mirza Baig, Global Head of ESG 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. Engagement provides us the opportunity to partner with companies as they navigate the challenges of transition. However, for our engagement approach to have impact, it must be accompanied by a robust escalation process, including the ultimate sanction of divestment.”
The engagement programme includes companies from the oil and gas, metals and mining and utilities sectors that substantially contribute to total global carbon emissions. Its stipulations 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, adjustments to management incentives and lobbying activities.
Progress will be monitored on a six-monthly basis, at which point Aviva Investors will determine the need for escalation. This 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.
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. This approach has the complete backing of our investment teams. 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.”
2 February 2021