Aviva plc head office in the City of London | Credit: Aviva
Insurance giant confirms it will divest from major coal producers without accredited climate plans by the end of next year
Aviva has announced it intends to reach net zero emissions across its operations, supply chain, and investments by 2040, unveiling a number of new exclusion policies that will see the firm distance itself from the most carbon intensive fossil fuel companies.
Under the new plans, announced this morning, the firm intends to reduce the carbon emissions of its operations and supply chain by 2030, while simultaneously working to ratchet down the carbon intensity of the projects it invests in.
The company, which has touted its net zero goal as “the most demanding target of any major insurance company in the world”, said it would track progress towards its targets through annual public reporting and would get its work validated by the Science Based Targets initiative (SBTi).
Meanwhile, it will spend £100m over the coming decade on nature-based solutions by 2030 that can compensate for remaining carbon emissions, it said.
Chief executive officer Amanda Blanc said the firm had a responsibility to drive action on climate change as the UK’s largest insurance firm. “Aviva is taking bold steps to tackle the climate crisis,” she said. “As the UK’s leading insurer, we have a huge responsibility to change the way we invest, insure and serve our customers. For the world to reach net zero, its going to take leadership and radical ambition.”
Under the plan, Aviva has established interim targets to reduce the carbon intensity of its investments by 25 per cent by 2025 and 60 per cent by 2030. The targets will cover credit, equities, direct real estate, and sovereign debt, it said.
It emphasised its policy was to use “active ownership” to encourage companies in its portfolio and its clients to reduce their carbon emissions. However, the company also confirmed it would be introducing a number of new fossil fuel exclusion policies that would see it stop working with businesses that are not comitted to cleaning up their operations.
As such, from the end of 2022 Aviva will divest from all companies which make more than five per cent of their revenue from coal, unless they have signed up to the SBTi, it said.
In addition, the firm has pledged to stop underwriting insurance from the end of this year for companies that make more than five per cent of their revenue from coal or ‘unconventional’ fossil fuels, such as tar sands, shale gas, deep water oil, and oil shale, unless they have signed up to the SBTi.
Aviva emphasised that engagement with companies would be critical, noting hat it had launched a ‘climate escalation programme’ last month targeted at encouraging major 30 oil and gas, metals and mining, and utilities companies to sign up to the SBTi. The firm said it would put firms on its stop-list and divest itself of assets it holds if it does not see evidence of “serious engagement”, although it did not confirm what time frame it was working to.
As it announced its new climate policies, the firm also highlighted its ongoing green investment drive, which includes a pledge to invest £10bn from its auto-enrollment default funds and other policyholder funds into low carbon strategies by the end of 2022 and and to invest £2.5bn in green assets, £2.5bn in low carbon and renewable energy infrastructure, and deliver £1bn in low carbon transition loans by 2025.
Aviva’s net zero pledge is part of a growing trend across the insurance industry and comes just a few months after Lloyd’s of London pledged to end investment in coal, oil sands and Arctic exploration from 1 January 2022.
Want to find out more about Net Zero Finance, TCFD reporting, and the investment trends impacting businesses and investors of all types? Then join us at the Net Zero Finance pathway event, as part of the Net Zero Festival 2021, which will take place online on March 16th. You can request an invitation to the event here.