Aviva Investors will require companies to deliver net-zero scope 3 emissions by 2050 and transition roadmaps or face full divestment.

Mirza Baig, global head of ESG Research and Stewardship at Aviva Investors, said: “Aviva Investors’ ESG philosophy promotes the relative merits of engagement over divestment as the more effective mechanism of delivering positive change and outcomes for our clients and society. Engagement provides us the opportunity to partner with companies as they navigate the challenges of transition. However, for our engagement approach to have impact, it must be accompanied by a robust escalation process, including the ultimate sanction of divestment.”

The engagement programme includes companies from the oil and gas, metals and mining and utilities sectors that substantially contribute to total global carbon emissions. Its stipulations include the adoption of science-based targets covering the full carbon footprint of the businesses, the reframing of corporate strategies, business plans and capital frameworks, adjustments to management incentives and lobbying activities.

The responsiveness of the companies in scope will be determined by a qualitative assessment of progress against Aviva Investors’ climate engagement framework and quantitative improvements against the firm’s proprietary climate transition risk model.

Progress will be monitored on a six-monthly basis, at which point Aviva Investors will determine the need for escalation. This may include votes against directors, the filing of shareholder proposals, and working with aligned stakeholder groups to apply further pressure. Companies that fail to make sufficient progress at the conclusion of the programme will trigger full divestment across Aviva Investors’ equity and credit portfolios.

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