Aviva launches ESG pension default strategy

Aviva has launched a workplace pension default investment strategy incorporating ethical and environmental, social and governance (ESG) considerations.

The stewardship lifestyle strategy is fully tilted towards ethical and ESG considerations throughout the growth and consolidation phases, meaning the members “can be reassured” ESG will be incorporated all the way up to their selected retirement date.

Employers will be able to use the strategy as a default, while also allowing employees to select it as an alternative to their existing default.

Aviva head of workplace propositions, Matt McGill, said: “Responsible investing is no longer a ‘nice to have’. The investment and workplace pensions industry can play a huge role in changing the world we live in for the better, and the launch of this lifestyle strategy, utilising the stewardship funds, is a big step towards that.”

The stewardship fund itself has three layers, including excluding companies based on there involvement with certain sectors; engaging with companies to improve how they conduct their business and measuring the ESG performance in which the funds are invested.

The group said it has been engaging with companies including Burberry to reduce the use of fur and Standard and Chartered to stop financing companies producing coal.

Speaking to Pensions Age, Aviva Investors chief responsible investment officer, Steve Waygood, said: “I think the biggest thing we lack, not just in the UK but in every market, is investors who understand how money shapes the world ... As an industry we need to get much better at connecting the individual capitalist and our clients.

“I’d love to imagine we could use fintech to allow people to see what is in their funds, and we made a step in the right direction last year when we helped launch the World Benchmarking Alliance, which is something we envisaged about five years ago.”

Furthermore, Aviva said will also measure the ESG performance of strategy and not just the companies it invests in. Since April last year, the number of companies offering equal opportunities has gone from 73 per cent to 80 per cent, while the carbon footprint has also gone down.

“We are trying to have macro measures of the fund so the client can see … we are trying to see what we can do with the data, and the data coming out of the companies is significantly better than when the fund started in 1984,” Waygood added.

The group has been involved in several corporate responsibility initiatives and helped found the World Benchmarking Alliance, a public set of league tables ranking 2,000 global companies on the United Nation’s sustainable development goals.

It added that ESG is now a key consideration for many of its clients and that it wants to make sure it “fully meets the clients needs in this space”.

“Hopefully we can engage and get them to the point they want to use this as a default solution … the pressure we are seeing from members to find solutions that meet these is there,” McGill concluded.

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