UK insurer Aviva has unveiled plans to become a net zero carbon emissions firm by 2040, as the company sets targets ahead of those required by the Paris Agreement.
The Aviva plan includes net zero emissions from its investments by 2040; a cut of 25% in the carbon intensity of its investments by 2025 and of 60% by 2030; and net zero carbon emissions from its own operations and supply chain by 2030.
The company explains that it will include its scope 1, 2, and 3 emissions, and include shareholder assets and policyholder assets where Aviva has control over the decision making.
The insurer has established a pathway to achieve its goal with immediate actions and targets for 2025, 2030, and 2040, with progress towards its targets tracked through annual, public reporting.
Aviva is also taking further action on coal immediately. By the end of next year, the insurer will divest from companies which make more than 5% of their revenue from coal unless they have signed up to the Science Based Targets initiative, designed to provide companies with a clearly-defined path to reduce emissions in line with the Paris Agreement goals.
Furthermore, by the end of this year, the firm says that it will have stopped underwriting insurance for companies making more than 5% of their revenue from coal or unconventional fossil fuels, unless they have signed up to the Science Based Targets initiative.
Aviva Group Chief Executive Officer (CEO), Amanda Blanc, commented: “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.”
Kwasi Kwarteng, Business and Energy Secretary, 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 plan to reach net zero carbon emissions by 2040 includes the main asset classes of Aviva’s core markets: credit, equities, direct real estate and sovereign debt.
Additionally, Aviva will be increasing its green investments, and expects by the end of 2022 to have invested a further £10 billion of assets from its auto enrolment default funds and other policyholder funds into low carbon strategies. And, by 2025, Aviva will invest £6 billion in green assets, while investors will invest £2.5 billion in low carbon and renewable energy infrastructure and deliver £1 billion of carbon transition loans.
“It is great to see Aviva take such an influential step to become a Net Zero company by 2040, leading the UK’s financial sector on a path to a resilient, green future,” said Andrew Griffith, UK Net Zero Business Champion.
“As part of our Together for Our Planet campaign, this is exactly the sort of ambition that we want to celebrate, inspiring other businesses to build back greener as we transition together towards a prosperous, low carbon economy,” he added.
According to Aviva, emissions reductions will make up the vast majority of its net zero shift. However, the firm does expect to need to remove residual emissions in 2040 and will invest in nature-based solutions and other options to do this. Also today, Aviva has announced a first step with a £100 million committed to nature-based solutions by 2030.
The targets build on Aviva’s leadership and decades of work on environmental, social and governance (ESG) issues.
It could be suggested that there’s potential for Aviva to do more on the underwriting side and only time will tell whether actions here will be enough, or if this is just an initial step for aligning the liability side of the business with investor motivations on ESG.
Richard Curtis, co-founder at Make My Money Matter, commented on Aviva’s targets: “Aviva’s announcement today makes it a global leader on Net Zero, and in driving the transition towards a green financial system. 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.”
