2020 was the year when Aviva Investors “turned talk into action”, according to the firm’s annual responsible investment review published last Thursday.
Mark Versey, Aviva Investors’s CEO, believes Covid-19 has helped in promoting responsible investment.
“History may look back on 2020 as a turning point for environmental, social and governance (ESG) issues,” said Versey, adding that investors have a vital role in pushing for change.
For Aviva Investors, that means using voting rights and investment decisions to drive the sustainability transition.
One of the asset management firm’s investment approach is to exclude companies causing significant harm to its sustainable goals. For example, Aviva Investors decreased credit exposure to German pharmaceutical firm Bayer after the company acquired US group Monsanto two years ago. Monsanto’s core weed killer product was deemed culpable for more than 100,000 cases of cancer by the US court. Aviva said Bayer “failed to act” and its ESG team generated a negative ESG rating on the German pharmaceutical company, while it became a seller of the blue-chip company.
The Aviva Investors Continental European Equity Fund cut down Bayer’s holdings in its portfolio to 0.11% as of mid-October from 2.47% last April, according to the fund’s annual and interim reports.
Another of Aviva Investors’ investment approach is investing in firms that directly tackle sustainability challenges. The firm said in the past year it supplied £189 m ($259m) of sustainable lending, invested £172 m in social housing, and reached 730 megawatts of low-carbon and renewable energy generation capacity.
However, the firm acknowledged that it needs to hasten its responsible investment pace if it wants to reach its ambitious goals. The firm has committed to achieving net-zero emissions by 2040 and sets nine responsible investment objectives, but is already lagging in some of the goals. For instance, it aims to invest £2.5 bn in low-carbon and renewable energy infrastructure and buildings by 2025. The company managed to finance £283 m towards this target in 2020, falling short of the £500m annual target.
Apart from direct investment, Aviva Investors also highlighted the power of voting rights as shareholders in responsible investment. The firm was ranked second among global asset managers last year by ShareAction in using voting for action on climate and social issues. The company voted at 6,457 shareholder meetings last year and voted against 24% of management proposals, including 43% on pay proposals.
Aviva Investors is the global the global asset management business of Aviva plc, and manages more than £365.8bn of assets.
