Aviva announces plans to be net zero by 2040

Aviva has announced plans to become a net zero carbon emissions company by 2040, in what it said was the “most demanding target of any major insurance company in the world today”.

The insurer has outlined a pathway to achieve its goal with immediate actions and targets for 2025, 2030 and 2040, and will sign up to the Science Based Targets initiative so its work can be validated.

It plans to use active ownership to drive companies to reduce their carbon emissions, and will continue to support the transition to low carbon by investing in non-fossil fuel project finance bonds.

The group is also taking immediate action on coal, and has pledged to divest from all companies which make more than 5 per cent of their revenue from coal unless they have signed up to the Science Based Targets initiative by the end of 2022.

Alongside this, Aviva has pledged to stop underwriting insurance for companies making more than 5 per cent of their revenue from coal or unconventional fossil fuels, unless they have signed up to the Science Based Targets initiative, by the end of 2021.

The group will also increase green investments, and is expected to invest a further £10bn of assets from its auto-enrolment default funds and other policyholder funds into low-carbon strategies by 2022.

By 2025, it has pledged to invest a further £6bn in green assets, including £1.5bn of policyholder monies into climate transition funds, and to invest £2.5bn in low carbon and renewable energy infrastructure, as well as delivering £1bn of carbon transition loans.

More broadly, the group is targeting net zero in its own operations by 2030, aiming for 100 renewable electricity for all offices, and for 100 per cent electric or hybrid vehicle leases for its motor fleet by 2025.

Aviva recently confirmed that it was intensifying active ownership of investments through its climate engagement escalation programme, making specific asks of these companies, against the risk of divestment.

However, whilst the insurer acknowledged that emissions reductions will make up the "vast majority" of its shift to net zero, it clarified that it will need to remove residual emissions in 2040, with plans to invest in nature-based solutions to do this, including a “first step” £100m commitment to nature-based solutions by 2030.

Aviva will be putting its Taskforce for Climate-related Financial Disclosure to an advisory vote at its Annual General Meeting of Shareholders in May later this year.

Commenting on the plans, Aviva group chief executive officer, Amanda Blanc, said: “Aviva is taking bold steps to help tackle the climate crisis. As the UK’s leading insurer, we have a huge responsibility to change the way we invest, insure and serve our customers.

“For the world to reach net zero, it’s going to take leadership and radical ambition. And it is going to take Aviva to play our part.”

Business and Energy Secretary Kwasi Kwarteng, added: “Businesses have a huge and vital role to play in tackling climate change.

“It is fantastic that Aviva is taking radical action across its business, which will help the UK eliminate its contribution to climate change and influence other businesses to move in the same direction.

“In order to reach our 2050 climate target, we must work with companies like Aviva to harness the strength of the UK’s world leading financial sector to unleash the private capital necessary to reduce carbon emissions and support new jobs as the UK builds back greener.”

The plans have also been welcomed by campaign group, Make My Money Matter, with co-founder, Richard Curtis, highlighting Aviva as a “global leader on net zero” in light of the commitment.

He commented: "Before COP26, it’s crucial that the entire industry aligns to the Paris Climate Agreement, and Aviva is showing the critical steps which must be taken: ambitious, front-loaded targets, investment in climate solutions, divestment from coal, annual reporting on progress, shareholder engagement, and science-based, independent verification.

“In going above and beyond its peers this net zero pledge leads the race to the top we need to see from all financial institutions who recognise the dual role they play in fighting the climate crisis while at the same time working for their customers’ interests.

“Now is the moment for the rest of the industry to step up and join the movement. The UK finance industry has the opportunity and responsibility to harness our economic system for the good of people and planet.

“They need to be the heroes of the hour. Aviva’s pledge should push others to outline their own ambitions to tackle the climate crisis head on and build a better world for our children.”

The announcement follows plans from Scottish Widows, which target net zero across its entire portfolio of investments by 2050, with similar commitments also made by Smart Pension, Hymans Robertson, and the National Grid UK Pension Scheme, whilst Cushon launched the "world first" Net Zero Now Pension.

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