ESG investing

A proud history of responsible investment at Aviva

Aviva has always been at the forefront of responsible investment; from being the first carbon-neutral international insurer, to being awarded the UN Momentum for Change Award in 2017 in recognition of Aviva’s commitment to reducing its environmental impact and helping inspire action on climate change for more than a decade.  During which time we have been at the vanguard of investors leading market changing initiatives, including helping to author the world’s first corporate governance code and the UN Principles for Responsible Investment.

Aviva Investors & The Stewardship Funds

Aviva Investors is Aviva's global asset manager, and responsible investment has been central to their values and investment philosophy for many years. They took on the management of the Stewardship Funds in April 2018, and since then the Stewardship team has set about reviewing all of the holdings in the Stewardship Funds  to ensure they remain suitable for the portfolios.

They use their influence and experience to support and promote the long-term sustainability of capital markets, economies and society, led by a dedicated Global Responsible Investment (GRI) Team of 22 professionals with significant experience in ESG.

Aviva Investors focuses on integration and active ownership to deliver positive outcomes from its approach to responsible investment.

The philosophy of the Stewardship Funds recognises that the contribution companies make to a sustainable society depends both on the products and services they provide, and how they provide them. This results in the funds excluding companies that do not meet certain ethical standards or that harm society or the environment. The team behind the Stewardship Funds engage and support companies that make a positive contribution to a sustainable society, encouraging positive ESG practices.

What is ESG?

ESG means "environmental, social and governance" and represents extra-financial factors that can be used to help us better understand the material risks and opportunities of the assets we invest in. ESG research can provide valuable information and insight by analysing potentially unacknowledged yet material risks, that may impact the performance and reputation of our investments.

  • Environmental factors can include a company's energy usage, waste, pollution, natural resource conservation and animal treatment.
  • Social factors would often include the company's relationships with and auditing of its suppliers, how it looks after its staff in terms of health & safety and training and issues surrounding diversity and inclusion.
  • Governance factors involve how a company is run, such as how transparent and accurate a company is being regarding its accounting, how it deals with conflicts of interest, the suitability and competency of its board members and any issues with bribery and corruption.

The factors can vary depending on the sector, geography and company in question. A technology company, a mining company and a bank, for example, will face different key ESG risks and opportunities.

Environmental Social Governance
How the company interacts with the environment How the company interacts with society How the company is run

Climate change

Natural resources

Pollution and waste

Energy use

Working conditions

Health and safety

Employee relations and diversity

Data protection

Executive pay

Bribery and corruption

Board diversity

Risk management

What is ESG investing all about?

ESG investing has become mainstream and for many investors around the world, it’s a requirement that must be considered before they invest but why?

  • Climate change and emissions are now firmly on the global agenda of both governments and companies with a greater emphasis on long term sustainability.

  • Regulation has propelled ESG into the mainstream, as directives governing pension schemes and individual investors require further considerations around ESG.

  • Greater focus on company governance and “doing the right thing” has also put further pressure on individual companies to be more transparent around equal rights for their employers.

Stewardship Funds

About The Stewardship Funds

Launched in 1984, and managed by Aviva Investors, The Stewardship Funds have a proud heritage as the UK’s first range of ethical funds, whilst incorporating ESG factors. The range currently incorporates five funds – Managed, UK Equity, UK Equity Income, International Equity and Bond. Each fund has a clear investment policy which determines the types of companies they have exposure to. The funds aim to provide investment portfolios that are socially, ethically and environmentally sound.

Find out more about The Stewardship Funds

Philosophy

The Stewardship Funds Philosophy

The Stewardship Funds have a proud heritage as the UK's first ethical fund range, while also incorporating environmental, social and governance (ESG) considerations.  The aims of the Stewardship Funds have remained broadly consistent since the beginning:

  1. To exclude companies that do not meet the ethical standards of the funds or harm society or the environment
  2. To support companies that make a positive contribution to society
  3. To encourage better business practices through shared ownership and dialogue

The principles remain the same today, but the policies that guide fund Managers adapt to the changing world in which we live. Stewardship aims to determine whether the benefits delivered by a company or a sector outweigh the potential harm they may cause when creating those benefits and if, as shareholders, we believe we can influence them to reduce the harm and increase the benefits.

Investment Approach

The Stewardship Funds investment approach

Criteria

Companies and their shareholders can and do make a positive contribution to Society.  However, companies can also cause ethical, social and environmental issues by, for example; making harmful products; acting without regard to customers, employee and the communities in which they operate; polluting the environment; or failing to have acceptable governance practices.

The Stewardship Funds investment approach is based on three layers;

1. Exclusions - what a company does

2. Engagement - how a company goes about its business

3. Outcome - measuring the ESG performance of the companies we invest in at a fund level.

The Stewardship Funds are managed by Aviva Investors, Aviva's global asset manager. By building responsibility into all their investment processes, Aviva Investors aim to improve risk management and investment performance while at the same time help to create more sustainable investment solutions fit for the future.

Aviva Investors commitment to responsible investing