Aviva has been at the forefront of sustainable investment for many years; we've been a carbon-neutral organisation since 2006. We've also been a recipient of the 'UN Momentum for Change Climate Solutions Award' in 2017 in recognition of our commitment to reducing our environmental impact. We have been at the vanguard of helping to lead work on market-changing initiatives, including being among the founding signatories of the UN Principles for Responsible Investment. In 2021, we unveiled our ambition to be a net zero carbon business by 2040 - this was a first for a major insurance company. While we are working towards our Net Zero by 2040 ambition, we acknowledge that we have relationships with businesses and existing assets that may be associated with significant emissions. More information can be found here.
Aviva Investors & the Stewardship Funds
Aviva Investors is Aviva's dedicated asset manager, and sustainable investment is central to their values and investment philosophy. Aviva Investors took on the management of the Stewardship Funds in April 2018. The philosophy behind the Funds has always been, and remains, to guide capital allocation responsibly, and therefore to exclude or to include a company in the Funds based on what the company does and how it does it.
Significant resources at Aviva Investors feed into the management of ESG integration and engagement across the business. A team of more than 40 sustainability experts, including a dedicated Sustainable Investment function, work closely with fund managers and analysts across the asset manager's public and private market investment teams, including those who manage the Stewardship Funds.
Stewardship: Exclusion, Investment and Engagement and Monitoring
As mentioned, the philosophy behind the Stewardship Funds has always been, and remains, to guide capital allocation responsibly, and therefore to exclude or to include a company in the Funds based on what the company does and how it does it. This philosophy has been reviewed regularly since launch to ensure it remains suitable for the changing investment landscape. The Stewardship Fund approach is aligned with Aviva Investors’ three sustainability pillars — Climate, Earth, and People. These pillars and themes reflect what Aviva Investors believe to be the most important sustainability issues of our time and are rooted in the UN's 17 Sustainable Development Goals (SDGs), which offer a global view of the world’s most pressing challenges and what “sustainable” investment activity looks like. These pillars serve as the foundation for how Aviva Investors assesses which companies are suitable for investment. We hope that this demonstrates that the Funds not only exclude harmful businesses and industries, but also invest in businesses that are making a positive contribution to a sustainable future. The exclusion screens are then applied to the Funds.
Engagement and voting remain a major part of the Stewardship philosophy. The team engages regularly with businesses from different industries around the world on issues, such as climate change and diversity and inclusion, and also plastic pollution, to help foster positive change.
What is ESG?
ESG means "environmental, social and governance" and represents extra-financial factors that can be used by investment teams 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 and natural resource conservation.
- Social factors would often include the company's relationships with and auditing of its suppliers, how it looks after its staff in terms of human rights; including 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 impacts the environment and its plans to tackle climate change | 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 Data protection | Executive pay Bribery and corruption Board diversity Risk management |
Why is sustainability important to investors?
Sustainable investing has become more important for many investors around the world. It's something that many investors now consider 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 Factors into the mainstream, as directives governing pension schemes and individual investors require further ESG considerations.
- A greater focus on company governance has also put further pressure on individual companies to be more transparent around equal rights for their employees.
Stewardship Funds
About the Stewardship Funds
Launched in 1984, and managed by Aviva Investors, the Stewardship Funds have a proud heritage as one of the UK’s first ranges of ethical funds, whilst incorporating ESG factors. The range incorporates five funds –Stewardship International Equity, Stewardship Bond, Stewardship Equity, Stewardship UK Equity Income and Stewardship Managed. The funds have a clear investment policy which determines the types of companies they invest in.
Philosophy
The Stewardship Funds philosophy
The Stewardship Funds have a proud heritage as one of the UK's first ethical fund ranges, while also incorporating environmental, social and governance (ESG) considerations. The aims of the Stewardship Funds have remained broadly consistent since launch in 1984:
- To exclude companies that do not meet the ethical standards of the funds or harm society or the environment
- To support companies that make a positive contribution to society
- To encourage better business practices through shared ownership and dialogue.
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 have a consistent investment process. This is made up of three layers as shown below:
1. Avoid significant harm – exclusion screens are used to exclude companies that could be deemed harmful to the world and its people. The Funds also invests in companies which show alignment with one or more of Aviva Investors’ sustainability pillars – Earth, Climate and People.
2. Investment framework – once the exclusions have been employed, companies are assessed to check that their products/ and or operations show alignment with one or more of Aviva Investors’ sustainability pillars – Earth, Climate and People.
3. Engagement and monitoring – Aviva Investors engages with the companies in the Funds to encourage them to enact the best sustainability practices possible on issues such as climate change and governance. This is reviewed on an ongoing basis. The climate intensity and carbon emissions of the Funds are also monitored.
The Stewardship Funds are managed by Aviva Investors, Aviva's dedicated asset manager. By building sustainability into all their investment processes, Aviva Investors aims to improve risk management and investment performance, while at the same time helping to create more sustainable investment solutions and outcomes fit for the future.
