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July Sets New Record for Global ESG Fund Inflows

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Climate: Pressure Increases on US AMs

Stockholm (NordSIP) - ShareAction published a new report analysing the climate change voting record of asset managers at companies' AGMs. According to the report,...

Aviva under fire for pouring £370m into Polish coal industry (the Guardian)

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“World Benchmarking Alliance” Launches Sustainability Ranking Project

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Research

Facts & Figures

Inception of sustainability strategy2001
Total AUM (USD)415 billion
AUM Responsible Strategies (USD)8.98 billion
% screened2.16
% ESG integration100
% engagement78.8
% proxy voting96
Responsible Investment team23

Ticking Boxes

Firm-wide ESG integration Click here to read more
Impact investingX
PRI Signatory Click here to read more
UN Global Compact
CDP Signatory
UNEPFI Signatory
IIGCC Signatory
SWESIFX
Funds in HållbarhetsprofilenX
Other memberships Click here to see all other memberships

Exclusions

All RI StrategiesFirmwide
International norm violationsXX
Fossil fuel (all)XX
Thermal coalX
Anti-personnel landmines & Cluster munitions
Weapons of mass destruction (nuclear, biological & chemical)
Weapons (all)XX
TobaccoXX
AlcoholXX
GamblingXX
PornographyXX
FurXX
GMOsXX

IN BRIEF

Aviva Investors is the global asset manager who chooses the power of integration. With $415bn assets under management across fixed income, equities, real assets and multi-assets spanning 19 countries (as at 31 March 2020), our clients can benefit not just from our significant local knowledge and experience, but also from the extensive global investment resources at our disposal.

The future is full of questions. Only by working together can we find the answers. That’s why we integrate our whole business around our clients – their goals, their values, the experience they’ll have when they work with us. That’s why we start by listening closely and understanding our clients’ investment aspirations and concerns; from low prospective investment returns, to highly correlated asset prices, from the prospect of rising global interest rates to the challenges and opportunities of market volatility. Through our vast collective industry experience, we’ve been through every market cycle, making us better prepared for the next one.

Inspired by our deep client insight, we build solutions that aim to defy uncertainty, answering the questions that keep our clients awake at night. From large institutional investors to individuals saving for retirement, we bring it all together to deliver meaningful outcomes for our clients, now and over the long run. Integration is our competitive edge and could be yours, too.

Sustainable Products & Strategies

Core / Impact

Active SRI

Aviva Investors Sustainable Income & Growth

In Short Strategy description Aviva Investors Sustainable Income & Growth Fund ('the Fund') aims to deliver 5% gross income yield per annum and long-term capital growth...

Aviva Investors Climate Transition Euro Equity

In Short Strategy description The Aviva Investors Climate Transition European Equity fund is focused on the theme of global warming; it invests in European companies that...

Screened

SRI HIGHLIGHTS

Commitment to Sustainability

Aviva Investors believes it should act in a manner consistent with its role as long-term stewards of its clients’ assets. We maintain a deep conviction that ESG factors can have a material impact on investment returns and client outcomes. We believe that being a responsible financial actor means our investment approach must support, and not undermine, the long-term sustainability of capital markets, economies and society. Responsible investment is therefore embedded in our main investment principles, both as a separate principle as well as being integrated into the other principles.

To further strengthen our firm-wide Responsible Investment Philosophy, which indicates our overall investment belief and set of clear commitments, in 2019 we established separate ESG policies for each asset class; Credit & Equities, Real Assets, Multi asset, Macro and LDI and Manager Research. These policies outline on a more granular level how we continue to turn the policy into practice in each differentiated investment approach.
Our firm-wide Responsible Investment Philosophy is reviewed and approved by the Aviva Investors Holdings Limited (‘AIHL’) Board. Responsibility for implementation rests with the Executive Committee and heads of investment functions.

A firm-wide ESG Governance Committee which reports to the Executive Committee was also set up in 2018, to provide firm-wide oversight of the implementation of the new firm-wide Responsible Investment Philosophy. The ESG Governance Committee is chaired by Al Denholm, our Chief Investment Officer for Solutions, and meets on a quarterly basis. The Chief Investment Officers for all our asset class capabilities are also part of the Committee, in addition to representatives from our Global Client Solutions, including product strategy, sales and marketing to ensure our client’s voice is strongly represented.

Our Responsible Investment Philosophy is further supported by two other firm-wide policies; our Stewardship Policy and our Voting Policy. Both of these are approved by the AIHL Board and also the Aviva Group Board Governance Committee and are reviewed on an annual basis.

Our Responsible Investment approach has three main pillars:

1. Responsibility Built-in: Our firm-wide responsible investing philosophy, policies and governance and our bespoke asset class policies, evidence our commitment and transparency as a responsible investor. We are committed to investment integration; setting 6 core principles consistent across each asset class and providing a quantitative and qualitative robust research foundation to upskill the investment teams. We have significant ambition and commitment to transition to a sustainable future by supporting four sustainable outcomes (people, community, earth and climate care). We provide clients with optionality of fund strategies which achieve financial objectives, whilst avoiding direct exposure to companies and sectors that are contrary to their religious, ethical or sustainability values. We avoid or divest positions when unmanaged ESG factors fall outside of our risk tolerance and engagement is deemed unsuccessful.

2. Powering change: We power change in the companies we invest in through active ownership and stewardship and have been voting on companies since 1970. Through engagement and voting – we use our influence to promote good practice among those companies in which we invest, and to gain insight and reduce investment risk on ESG issues for our clients. We focus on generating outcomes that benefit our clients and in many cases society, the environment and the broader economy as well. Since becoming a founding signatory to Climate Wise in 2007, we have worked with more than 40 external initiatives including UNPRI, Institutional Investors Group on Climate Change, 30% Club, Palm Oil, Workforce Disclosure Initiative Shaping markets for sustainability – we advocate policy measures that support longer term, more sustainable capital markets. We aim to correct market failures such as a lack of corporate disclosure on ESG risks and climate change – at a national, EU, OECD and UN level, to improve long-term policy outcomes. We have been leading change through World Benchmarking Alliance (with UN) and Corporate Human Rights Benchmark.

3. Connected thinking: Connecting people, perspectives and data. We believe in the power of connected thinking. Creating a sustainable future and delivering long-term investment returns can only be accomplished by working together with clients, competitors, policy-makers and regulators to connect different perspectives, share knowledge and experience. Our Internal research hub facilitates connecting thinking internally across asset classes through efficient company-wide sharing of latest information. We connect with multi-stakeholder externally through 80 collaborative initiatives.

The policy is implemented by a Global Responsible Investment (‘GRI’) team of 23 permanent employees who work with the rest of Aviva Investors to deliver the three pillars.
For further information, and to view our policies, please visit our website at https://www.avivainvestors.com/en-gb/about/responsible-investment/.

Engagement Resources
Our engagement activity and voting will be specific to each individual company and assessed on a case by case basis. Clear objectives for engagement are set out and engagement outcomes are registered in our database, which is reflected in our voting and feed into our proprietary ESG Heatmap. Engagement is undertaken in close co-operation with the investment teams and key conclusions from company engagements are fed back to portfolio managers.
Our ESG Heatmap is based on a combination of independent ESG data, research and our own assessments of company ESG practices (through monitoring and engagement), which are also recorded in our in-house database. We use our heatmap and database to help identify investment risk and prioritise areas of greatest concern, having taken into consideration issues such as the size of our holding, thematic priorities such as climate change, AGM-related priorities and the materiality of issues identified.

The heatmap allows us to regularly assess the potential risks and any mitigating factors to establish whether the security requires continuous monitoring and / or engagement. If concerns persist (particularly if engagement objectives are unsuccessful) we may decide to divest. Should we have an active holding in a company that has a major incident, we will seek to engage with the company to ascertain how it is handling the issues and whether to expect further risks which will be reflected in our investment considerations. We have a well-established NGO risk monitoring system where we monitor the companies that a selection of the most credible NGOs are focusing on, and we engage with NGOs on a broad range of topics.

Where engagement with companies, whether on strategic, performance, general ESG or specific voting issues, is undertaken for specific purposes, the effectiveness of such engagements will be measured against the objectives (of engagement) set at the outset. We maintain a database to record our voting and engagement with companies which allows us to review the effectiveness of our work. For our priority engagements our intention is to review these on a quarterly or half yearly basis. These are often detailed in our reports to clients and in case studies, which may also be included in Request for Proposal (RFP) material.
There will be times when, despite engagement with companies, our concerns have not been adequately addressed. Under these circumstances, the matter may be escalated into a more focused project of intervention aimed at securing changes to the board, management, practices or strategy.

As part of our escalation process, we may ask to discuss issues with executive and/or non-executive directors, work with other institutions and investors to press for change or exercise our voting rights against the board. As a last resort we may requisition a general meeting of a company or a resolution at an Annual General Meeting, or support others who are doing so. We may also make public statements where we believe this is appropriate. However, we expect this to happen only in the most extreme cases.

Our Corporate Governance and Corporate Responsibility Voting Policy sets out the standards of corporate governance and corporate responsibility we expect from the companies in which we invest and how we apply this to voting on resolutions at shareholder meetings. It covers the prioritisation of voting activities, decision making processes, our views on ESG factors and transparency of proxy voting activities. Our policies and practices on issues such as managing conflicts of interest and processes for recalling shares from loan are detailed in our Stewardship Policy.

The policy, along with our voting history, can be found on our website at https://www.avivainvestors.com/en-gb/about/responsible-investment/our-approach/

ESG team
Aviva Investors decades of experience integrating ESG issues into investment analysis and decision-making. Our dedicated GRI team is comprised of 23 professionals, 21 of which are governance and responsible investment specialists who are co-located with our investment teams and have an average ESG experience of 10 years. They provide analysis to our investment teams and collaborate on investment research and generating investment ideas, engagement cases and voting decisions. We collectively look for material ESG risks to the investment case and would engage with the company to seek assurances that material risks are being addressed. The focus of any engagement is on adding to the long-term value of our clients’ investments.

The GRI team acts as a centre of expertise on ESG matters and is on hand to work with portfolio managers and analysts. The team is headed by Steve Waygood, Chief Responsible Investment Officer. The GRI team facilitate knowledge sharing across the business and upskill the investment teams. The active research coverage at Aviva Investors is applied to the investment universe across each asset class. Research includes a quantitative summary score, written reports, and verbal contributions to investment reviews and forums. The ESG content produced supports investment decisions, education on sector specific ESG analysis, and engagement with companies and clients.
We work to power positive change across all asset classes on behalf of all our clients. The GRI team and the investment teams collectively look for material ESG risks to the investment case and engage with the company to seek assurances that material risks are being addressed.

We believe that for responsible investment considerations to have a positive and meaningful impact on investment decisions, they must be fully embedded within the fundamental investment process. Our GRI team works together with fund managers and analysts to add value through the integration of ESG factors into the specific investment analysis and decision-making process of each investment desk. We have also integrated ESG factors into our incentive structures for all staff.

Proxy Voting
Aviva’s Corporate Governance and Corporate Responsibility Voting Policy sets out the standards of good corporate governance and corporate responsibility we expect from the companies in which we invest and outlines how this is translated into our voting policy. Aviva considers voting to be an important part of the investment process and have had a formal and considered voting policy since 1994, being one of the first asset managers to publish a Corporate Governance Voting Policy. Aviva has explicitly incorporated corporate responsibility disclosure and performance into our voting since 2001; being one of the first asset managers to do so globally. Both documents are reviewed annually and signed off by the Aviva Board.

Voting decisions for our active positions are made by the GRI team in conjunction with portfolio managers who bring their knowledge and assessment of company strategy and special circumstances, enabling their insights to inform the decision-making process.

Aviva subscribes to proxy advisory services to prepare research and recommendations in line with its custom policy and refer certain issues to us for further consideration. In making voting decisions, Aviva uses governance and other research from a number of sources. These include the IVIS service and ISS-Ethix, Vigeo EIRIS and MSCI. Aviva uses research for data analysis only as we have our own robust voting policy, which is applied to all our holdings. Aviva does not automatically follow any voting recommendations. It votes based on its in-house policy, taking into consideration the views of the fund manager and the conversations with the company through its voting specific engagement. 

SRI Awards and Recognitions
 In 2018 Aviva received the United Nations Foundation Leadership Award in recognition of our work to support the United Nations Sustainable Development Goals. Additionally, as part of our continued efforts in market reform, Aviva helped launch the World Benchmarking Alliance in 2018, following a global consultation with over 10,000 respondents. The initiative secured two awards in the first six weeks of being announced.

Aviva Investors was recognised in the most recent Share Action Survey on responsible investment governance, climate change, biodiversity and human rights, as being one of the only five top-ranked investors who scored A+.

Aviva was also recognised for other awards and rankings during 2019, as a market leader for our responsible investment practices. Aviva was named Infrastructure Manager of the Year at the Insurance Asset Management Awards for our environmental, social and governance (‘ESG’) integration. It was also recognised by Share Action to be amongst the top three investors globally when it comes to using our vote to promote climate action and received the 2019 ICGN stewardship disclosure award. 

Source & Resources

Important information
Except where stated as otherwise, the source of all information is Aviva Investors Global Services Limited (AIGSL). Unless stated otherwise any views and opinions are those of Aviva Investors. They should not be viewed as indicating any guarantee of return from an investment managed by Aviva Investors nor as advice of any nature. Information contained herein has been obtained from sources believed to be reliable, but has not been independently verified by Aviva Investors and is not guaranteed to be accurate. Past performance is not a guide to the future. The value of an investment and any income from it may go down as well as up and the investor may not get back the original amount invested. Nothing in this material, including any references to specific securities, assets classes and financial markets is intended to or should be construed as advice or recommendations of any nature. This material is not a recommendation to sell or purchase any investment.

In Europe, this document is issued by Aviva Investors Luxembourg S.A. Registered Office: 2 rue du Fort Bourbon, 1st Floor, 1249 Luxembourg. Supervised by Commission de Surveillance du Secteur Financier. An Aviva company. In the UK Issued by Aviva Investors Global Services Limited. Registered in England No. 1151805. Registered Office: St Helens, 1 Undershaft, London EC3P 3DQ. Authorised and regulated by the Financial Conduct Authority. Firm Reference No. 119178.