Identification of leadership opportunity
Aviva’s work on climate change goes back over two decades.
- In 2000, Aviva Investors hosted the first ever meeting of the Carbon Disclosure Project, which has now grown to be a network of investors representing over $100 trillion with offices and partners in 50 countries.
- We were the first carbon neutral international insurer in 2006.
- In 2012 we successfully persuaded the UK Government to require all listed companies to disclosure their Greenhouse Gas emissions.
As part of Aviva’s Strategic Response to Climate Change from 2015 we made a commitment to divest where necessary. We identified an initial set of 40 companies where Aviva has beneficial holdings and which have more than 30% of their business (by revenue) associated with thermal coal mining or power generation.
We have focused engagement with these 40 companies, setting out our expectations on the governance, business strategy, operational efficiency, responsible climate and energy policy advocacy and crucially whether the company has any plans for new investment in coal generating capacity.
And we are willing to divest where necessary where we do not see progress following our engagement. In 2017, we divested from the Japanese coal company J Power and the Polish coal company PGE. We have also announced in our climate-related financial disclosure in March that we are in the process of divesting a further fifteen companies from our portfolio.
Broadening the scope of the Aviva Strategic Response to Climate Change beyond coal powered utility companies to encompass extreme fossil fuels – energy sources dubbed “extreme” because of their contribution to global emissions. These include oil sands, arctic oil, ultra-deepwater oil extraction, liquefied natural gas export and coal mining.
In the first instance we will engage with the companies in scope to encourage them to tilt their strategy towards a low carbon economy. We will probe into whether the companies are putting new capital expenditure into extreme fossil fuels. If the companies are continuing on a trajectory that doesn’t fit into a 2 degree , post Paris Agreement, scenario then we will divest publically from the company.
Why it is relevant and of personal interest
Investors can play a role in driving positive change and helping companies transition into low carbon and renewable energies. We want to use every possible opportunity to mobilise the transition to a low to no carbon economy. The easiest thing in the world is to simply divest. Engaging with a company takes much more time, energy and resources.
Many of the companies we’ve engaged with tell us that we are the first investors to ask questions about their response to climate change. While our conversations have been challenging — and will likely result in additional divestments by Aviva — there is undoubted value in them.
The time has come to broaden the scope of the Aviva Strategic Response to Climate Change by including all extreme fossil fuels as candidates for engagement and possible divestment.