Environmental, Social, and Governance (ESG)
With you today, for a better tomorrow
Responsible investment, and caring for the world around us, is not a fad at Aviva. It’s something we’ve been doing for a long time – whether that be as an insurer, as one of the UK's largest financial companies, as an investor or as an employer.
Our achievements in this space reflect our ongoing commitment to investing responsibly. Helping create a better world for our customers, our families and communities in the UK and around the world is part of our lifeblood, part of Aviva’s history and something that we believe should be part of our future.
Aviva has been around for more than 320 years, taking care of people’s finances and helping people recover from crises. We believe that our 'care more' approach matters more than ever as we face the challenge of climate change, improving how companies operate and treat their staff and an ever-changing global environment, as we have seen since the outbreak of the Covid-19 crisis in March 2020.
ESG, which stands for Environmental, Social and Governance factors, is perhaps better termed 'responsible investment', and it used to describe three key factors that the fund managers, which manage our customers' savings on your behalf, look at how businesses behave and treat their employees, and their customers, and the world in which they operate.
Concerns about companies' impact on the natural environment, such as climate change, biodiversity, carbon emissions, air and water pollution.
Looks at the impact of company actions on society and communities, including human rights, health and safety issues, labour standards, product liability, privacy and data security.
Focuses on how companies are governed, including diversity, transparency, ownership, board independence, ethics and executive compensation.
We are committed to investing responsibly, with Environmental, Social and Governance (ESG) considerations a central pillar of our investment process. We believe this minimises risk and allows us to spot opportunities for our customers, empowering them to make more informed decisions and have a sense of purpose.
We believe that being a responsible investor can lead to better performance overall for our funds and therefore our customers.
- We’ve been a leader of responsible investment for more than 40 years.
- Our dedicated asset manager Aviva Investors was among the first asset managers to publish a Corporate Governance voting policy in 1994.
- Aviva was the first carbon-neutral international insurer in 2006.
We were awarded the UN Momentum for Change Award in 2017 for our commitment to reducing our environmental impact, and for helping to write the world’s first corporate governance code and the UN Principles for Responsible Investment.
1970 - 1999
- Voting at company meetings
- Aviva Investors was among the first asset managers to publish Corporate Governance Voting Policy
- Pledge at the UN summit to ‘balance of economic development, the welfare of people and a sound environment, by incorporating these considerations into business activities’
2000 - 2009
- Founding signatory and first asset manager to formally integrate corporate responsibility to voting policy
- Founding signatory of the Principles for Responsible Investment
- Founding signatory of Climate Wise
2010 - 2015
- In vanguard of signing the UK Stewardship Code
- Founded Corporate Sustainability Reporting Coalition with call to action at Rio+20 Conference
- Launched Roadmap for Sustainable Capital Markets & Sustainable Capital Markets Manifesto
- CEO speaks at UN General
- Assembly on Sustainable Finance
- Strategic Response to Climate Change published and actively participated in COP21
2016 - 2019
- Asked to join European Commission's High Level Expert Group on Sustainable Finance
- Asked to join European Commission's High Level Expert Group on Sustainable Finance
- Corporate Human Rights Benchmark launched at Aviva’s offices
- Responsible Investor Award for Innovation &
- UN award for sustainability work
- The World Benchmark Alliance is launched
- ESG Manager of the Year, Global Investor Group Investment Excellence Awards
- Stewardship Disclosure (Asset Manager) award category at the ICGN Global Stewardship Awards
What does this mean for workplace pensions?
Strength in numbers
Your employees will automatically become investors in businesses both in the UK and overseas when they haven't made an investment decision and so are automatically invested in the default fund. This means that if responsible investment is integrated throughout the default, or if there are dedicated ESG funds that they can choose from in the self-select range, there is a real opportunity with your employees' pension contributions and their investments, to bring about positive change in the many businesses they are invested in. Responsible investment is integrated across all of our default funds, and we also offer the Stewardship lifestyle default. Please see below for more information.
We believe that investing in funds where the fund manager engages with businesses to create positive change is key. In this way, you and your employees' savings can help ensure companies are aware of their risks, such as how they treat their staff or the risks in their supply chain. We hope that this will encourage your employees to take steps to make the world a better place for themselves, their families and for future generations. We also review all of the externally managed self-select funds that we offer our customers to ensure they incorporate ESG factors.
Responsibility built in
With Aviva you can be reassured that ESG factors have been considered across all our default funds. Responsible investment is integrated across My Future Focus, our default fund, which uses ESG research from our inhouse team of more than 30 responsible investment analysts. Along with regional tilts, this dedicated resource helps to enhance the focus of the fund on companies that score better in ESG terms. Our My Future default solution invests in the BlackRock World ESG Insights Equity Fund. We have designed this fund together with BlackRock, who manages the strategy and who also oversees the asset allocation of My Future. We also offer the Stewardship lifestyle default, the first lifestyle default of its kind, which enables customers to invest responsibly throughout their retirement journey.
Financial performance is still our number one consideration – in our Stewardship, My Future and My Future Focus funds. We believe investing responsibly and therefore helping firms become better businesses can lead to better financial performance over the long term.
Want to find out more about ethical investing? Read our article on investing sustainably through your pension.
My Future is the alternative default solution and has been designed to help members save for their retirement. Risk is managed throughout the retirement journey thanks to the mix of assets in the My Future funds, including company shares and bonds. The aim of this approach is to grow members’ pension savings in the earlier stages of the journey and then focus on preserving members’ capital as they get closer to retirement. Responsible investment has been integrated into My Future.
My Future Focus
My Future Focus is the Aviva Master Trust default investment solution, designed to give members the opportunity to benefit from gains in the world's financial markets while trying to minimise any unexpected volatility, particularly as they approach retirement. Responsible investment is fully integrated into My Future Focus.
Designed to incorporate ethical and environmental, social and governance (ESG) considerations, the Stewardship lifestyle default solution gives members the opportunity to secure a future for themselves and their families, while actively contributing to a sustainable long-term future for the world around them. These funds are available for members to select.
Our investment approach
Integrating ESG considerations into our decisions
We work together with fund managers and analysts, customising ESG integration for each investment process, to deliver better investment outcomes for our clients.
We incorporate ESG issues into our investment analysis and decision-making because we believe it delivers better investment outcomes for our clients, society and the environment.
As long-term investors, we see factors such as corporate culture, good governance, climate change strategy, and employee and market place attitudes as core to the success of our investments.
We want to invest in a way that seeks to achieve a good return for our savers and helps create the kind of future they wish to retire into.
Responsible investment is all about encouraging the companies we invest in to take a longer-term view and consider the impact their business decisions might have on the environment and local communities.
We use our influence to encourage other businesses to implement responsible business practices and engage with them on issues such as diversity and climate change.
We encourage change not just among the companies we invest in, but in our industry and economy as a whole.
Managing environmental impacts
Acting now for a better tomorrow matters to our business, our customers, our partners and the communities in which we operate. So, we’re radically reducing the environmental impact of our global business.
We are investing heavily in energy efficiency, generating our own renewable electricity, removing plastic, sending zero waste to landfill and are managing the impacts of our people and operations by carbon offsetting.
Beyond our operational impacts:
- We’re reducing the environmental impact of our propositions and claims processes.
- We’re leading the way and influencing other companies to tackle climate change now.
Building resilient communities
We exist to help our customers today, for a better tomorrow. And we have a duty to be a good corporate citizen by helping build strong and resilient communities wherever we operate.
Community investment – in 2020 we invested £43 million to charitable partners in our global markets to support customers and communities to face the impact of the COVID-19 pandemic.
We committed £11.5 million to other local projects, making total community investment £54.5 million in 2020. Overall, this has helped 5.1 million people around the world.
Our strategic partnership with the British Red Cross – since 2016, we’ve worked together to build community resilience. We’re proud to say that in that time, 3,600 of our people have volunteered their time and expertise to support the Red Cross movement. In 2020, Aviva pledged an extra £10m to support their vital work in response to the coronavirus crisis.
As a long-term investor, we are convinced that the investments we make on our clients’ behalf will be more successful if we understand how the companies and projects we invest in perform on issues like board diversity, governance, climate change and labour relations.
Engagement is a vital part of our investment process across a range of asset classes. We use our influence through engagement and voting to promote sustainable business practices, gain insight and reduce investment risk. And we’re not afraid to call out bad performance.
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