Sustainable Stewardship

Exclusion and investment

The philosophy behind the Sustainable Stewardship Funds has always been, and remains, to guide capital allocation responsibly, and therefore to exclude or to include companies in the Funds based on what they do and how they do it.

The guiding sustainability principles of the Sustainable Stewardship Funds are to:

• Avoid companies that do not meet certain ethical standards, or that harm society or the environment. 
• Support companies that make a positive contribution through investment.
• Encourage leading business practices. 

Alignment of the Funds with the United Nations (UN’s) Sustainable Development Goals

The UN’s 17 Sustainable Development Goals, also referred to as the SDGs, are used as the framework by the investment team to select companies for the Sustainable Stewardship Funds. We believe that this helps to demonstrate that the Funds’ investment in companies with sustainable business practices and which are contributing to a more sustainable world, is equally as important as the exclusion of harmful companies from the Funds. We believe that this reflects the changing investment landscape since the funds were launched in 1984.

Read more about the UN’s SDGs here.

The Funds’ investment objectives also include an explicit sustainability objective, that is the funds aim to align investments with the UN’s 17 Sustainable Development Goals or SDGs.

Negative social, ethical and environmental screens are used to exclude certain industries and companies from the Sustainable Stewardship Funds. Please see the Sustainable Stewardship philosophy document for details of the exclusions.

Engagement

We engage with companies to encourage them to enact the best possible sustainability practices.

This has a number of components:

1. Aviva Investors Annual Chair Letter – on an annual basis, Aviva Investors outlines a set of sustainability priorities that we expect companies to take into consideration. These are articulated in our annual letters to company chairs. The core elements of our expectations of our ‘People’, ‘Climate’ and ‘Earth’ Pillars outlined in the Chair letter are accompanied by Aviva Investors’ Sustainable Outcomes Programmes. 
2. Sustainable Stewardship thematic engagement – we initiate targeted thematic programmes on specific issues to encourage companies the Funds invest in to improve practices where they fall short of our expectations or to push the boundaries of best practice in a specific area. These themes continued to be diversity and inclusion – advocating for inclusive cultures and diverse workforces – and plastics – supporting the circular economy. 
3. Reactive engagement – we may engage in response to controversies and issues on sustainability issues. 
4. Collaborative initiatives – we exert our collective influence with other stakeholders and encourage companies to participate in market-leading collaborative initiatives.

Monitoring

We monitor the performance of the Sustainable Stewardship Funds against several ‘non-financial’ targets, including carbon emissions, the percentage of companies in the Funds with a set target to reduce emissions, as well as the percentage of companies in the Funds with a diversity policy and the average % of women on the board.