Aviva Targets Net-Zero Carbon by 2040

UK financial service firm’s environmental targets exceed Paris Agreement guidelines.


UK insurance and financial services giant Aviva has unveiled an ambitious target of becoming net-zero of carbon emissions by 2040.

The company’s strategy for reaching its goal includes a 25% reduction in the carbon intensity of its investments by 2025, which would increase to a 60% reduction by 2030, which is beyond the 50% cut required by the Paris Agreement. It also said it will aim to reach net-zero carbon emissions from its own operations and supply chain by 2030.

“As the UK’s leading insurer, we have a huge responsibility to change the way we invest, insure, and serve our customers,” Aviva Group Chief Executive Officer Amanda Blanc said in a statement. “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.”

Aviva said it will monitor its progress toward its targets through annual, public reporting, and that it will sign up to the Science Based Targets initiative so its efforts can be validated. It also said it will continue to use active ownership to compel companies to lower their carbon emissions and will continue to invest in non-fossil fuel project finance bonds.

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In the near term, Aviva plans to stop underwriting insurance for companies that make more than 5% of their revenue from coal or unconventional fossil fuels by the end of this year, unless they have signed up to the Science Based Targets initiative. And by the end of next year, it intends to divest from all companies that earn more than 5% of their revenue from coal, unless they also sign up to the initiative. 

Aviva’s plan to reach net-zero carbon emissions by 2040 also includes investing £10 billion ($14 billion) in assets from its automatic enrollment default funds and other policyholder funds into low-carbon strategies by the end of 2022. And by 2025 it intends to invest £6 billion in green assets, including £1.5 billion of policyholder money into climate transition funds, as well as £2.5 billion in low carbon and renewable energy infrastructure, and deliver £1 billion of carbon transition loans.

Additionally, the firm’s  office space will run on 100% renewable electricity by 2030, and its fleet of 1,540 automobiles will consist entirely of electric/hybrid vehicle new leases by 2025.

Although emissions reductions will make up the vast majority of the company’s transition to carbon net-zero, Aviva said it expects it will need to remove residual emissions in 2040, and will invest in nature-based solutions and other options to accomplish this—including an immediate commitment of £100 million to nature-based solutions by 2030.

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Canadian Pensions Can’t Quit External Management, Despite In-House Moves

Plans rely on outside help for better returns, talent, and technology.


Although Canadian pension funds are increasingly looking to move asset management in-house, they still rely heavily on external managers as they seek better returns, talent, and technology, according to a recent report from CIBC Mellon.

The CIBC report is based on a survey of 50 major Canadian pension managers with average assets under management (AUM) of C$31 billion (US$24.5 million). Approximately three-quarters of the plans surveyed were public, with the remainder being private.

According to the findings of the survey, the pension funds’ focus on cost savings has been motivating them to move more of their operations in-house. Of the pension funds that have taken asset management in-house, 66% said they seen savings as a result, with the vast majority of those (91%) seeing savings of more than 10%, and 35% saying the moves have saved them more than 20%. 

However, the survey found that Canadian pension funds would likely move even more resources in-house if not for a lack of technology and talent standing in their way.

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“Maintaining in-house technology capabilities and in-house expertise are challenging,” the chief financial officer of one fund said in the survey. “Addressing skill gaps is difficult at a time when the economic situation is changing and most companies are looking to adapt.”

According to the survey, seven out of 10 pension managers regard in-house expertise as one of the top three issues they have to confront in any shift to in-house asset management. Canadian pension funds are also seeking investment strategies founded on portfolios with diverse assets, including significant holdings of alternative assets.

“Securing sufficient expertise in such a broad range of areas is naturally difficult,” said the report. “It is also notable that 60% of pension fund respondents also cited concerns related to insufficient investment management experience on their boards.”

Despite Canadian pension funds’ plans to manage more of their assets in-house, outsourced asset management remains vital for Canadian pension funds, according to CIBC. The director of investments at one pension fund in the survey said the fund outsources the management of a majority of its assets because it limits risk and liability. However, better returns was the top reason given by pensions hiring external managers, which was cited by 58% of the pension funds in the survey.

The survey also found that in addition to looking for better returns from their external managers, pension funds are also looking to pay less for their services. According to CIBC’s findings, 86% of pension funds say they intend to “drive a harder bargain” on investment fees over the next 12 months as 42% said they are not happy with the current fees involved, and 54% said they expect to increase fixed hurdles in performance fees over the next year.

“Canadian pension plan sponsors and pension fund managers are looking across the board at the in-house versus outsourcing debate—from operations to technology to investment management,” CIBC’s Darcie James Maxwell said in a statement. “Even the largest plans increasingly recognize that they lack the scale and resources to be the very best at everything for which they are ultimately accountable.”

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