A proud history of responsible investment at Aviva
Aviva has been at the forefront of responsible investment for many years; from being the first carbon-neutral international insurer in 2006, to being a recipient of the 'UN Momentum for Change Climate Solutions Award' in 2017 in recognition of our commitment to reducing our environmental impact and helping provide inspiration on climate change to others for more than a decade. 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 and being among the first asset managers to publish a Corporate Governance Voting Policy. In 2021, we unveiled our goal 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 responsible investment has been central to their values and investment philosophy for nearly 50 years. Aviva Investors took on the management of the Stewardship Funds in April 2018. The asset manager then set about reviewing all of the holdings in the portfolios to ensure they remained suitable for the Funds, and tightened the screens that are used to exclude companies and industries from the Stewardship Funds.
The Stewardship Funds and the Stewardship team use their influence to support and promote the long-term sustainability of capital markets, economies and society. The Stewardship team comprises highly experienced fund managers who work together with a dedicated team of more than 30 responsible investment analysts at Aviva Investors. Aviva Investors focuses on investing responsibly across its funds, and also from being a major shareholder in many businesses across the world to aim to deliver positive outcomes for its clients.
Stewardship Philosophy: to exclude and to engage
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 engages and supports companies that make a positive contribution to a sustainable society, encouraging positive ESG (environmental, social and governance) practices.
Over the past five years, the Stewardship team has engaged with businesses from across all industries on key ESG themes including diversity, plastic pollution and climate change to foster positive change for the environment and for society. See the annual Stewardship report in the Key documents section below for examples of engagement and voting statistics.
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.
|How the company interacts with the environment||How the company interacts with society||How the company is run|
Pollution and waste
Health and safety
Employee relations and diversity
Bribery and corruption
What is ESG investing all about?
ESG investing has become mainstream and 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 into the mainstream, as directives governing pension schemes and individual investors require further considerations around ESG.
- A 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 employees.
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.
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:
- 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.
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.
The Stewardship Funds' investment approach
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 and outcomes fit for the future.