Aviva Investors, one of UK’s top asset managers, announced this week that it will potentially consider divesting from 30 of the world’s largest oil, gas and mining companies. After several years of hesitation on the topic, the asset manager has finally recognized the need to combine engagement policies with a time-bound threat of divestment. But going into the fineprint of Aviva’s new climate policy reveals the absence of any new clear phase out strategy for coal, let alone for companies still planning new fossil fuel projects.


Why Aviva Investors is still shrugging off its responsibilities

By leaving fossil fuel companies up to three years to write net zero plans and integrate climate risks into their strategies, Aviva Investors is once again delaying the most urgent divestments needed regarding climate objectives.

  • Although engagement is a crucial tool to be used by investors, it can not be the only solution. Investors must use a wide range of solutions in order to adapt to the diversity of companies’ profiles and positioning regarding the energy transition. Prioritization is key when it comes to effective engagement and it is a waste of time and energy to focus on companies that are still developing new projects in the riskiest fossil fuel sectors such as coal and unconventional oil and gas. These companies show no interest in transitioning and are threatening our chances to remain on a 1.5°C pathway. They should be divested immediately, and many asset owners and managers have already done so.
  • It is positive to see Aviva willing to put pressure on 30 investee companies to adopt science-based targets. Pushing companies to set science based targets could be part of the solution regarding energy transition. However the effect of such plans and target setting will not materialize before several years, while climate science calls for an immediate reduction in the fossil fuel production reduction globally. If it were sincere, Aviva would immediately suspend its investments in the aforementioned climate laggards, until these laggards have given up on their fossil fuels expansion plans, while engaging them to adopt science-based targets. Finally, it should be noted that science based-targets, even if validated by the SBTi initiative, are not immune to inconsistencies – take the example of RWE, Europe’s largest coal plant operator and CO2 emitter, which is planning to run its biggest coal plants until 2038.

Furthermore, it is important to remember that “integrating climate risks” into a company’s strategy, as required by Aviva, does not automatically lead to mitigating their climate impacts. For instance, a fossil fuel company could limit the impact of climate change on its financial results by diversifying itself and increasing the share of its activities in low or zero carbon sectors, while continuing its activities in the fossil fuel sector.

Denying the need to ditch fossil fuel developers

As we outlined in our analysis of BlackRock’s recent commitments, asking companies to establish net zero plans is fast becoming the new way to shrug off climate responsibilities for asset managers. Climate science has been telling us since 2015 that remaining on a 1.5°C pathway requires an end to the development of fossil fuel projects and an annual decrease of fossil fuel production by 6% until 2030. Despite Aviva Investors committing to phase out coal power by 2030, the asset manager remains invested in coal developers, such as BHP Group and Glencore, a highly contradictory position.

An embarrassing secret in Poland

Furthermore, even though Aviva is engaging with a number of coal companies, its divestment policy at the Group level does not extend to the third-party assets it manages. This is reflected by the fact that Aviva is still, for example, heavily invested in Polish companies that are actively expanding their coal business, thus revealing the limitations of its divestment approach.

Via the Polish pension funds that Aviva manages, the company still has over 250 million euros invested in coal companies (1). Even worse, throughout 2020, this pension fund has even increased its holdings in major European coal-heavy companies, such as Enea, PGE, with 12 million shares bought, and CEZ, with 600,000 new shares. The holdings in PGE are particularly worrying. The company is involved in the controversial Turów open pit mine, and has not announced a closure date for its coal plants.

Regarding oil and gas, the story is not very different. Throughout 2020, Aviva has been buying shares in all the oil and gas companies on the Polish stock exchange, such as state-owned oil and gas company PGNiG.

While it’s positive to see a big asset manager recognizing the need to put pressure on the oil, gas and mining industry, the first step for financial institutions to be taken seriously is to divest immediately from companies still planning new carbon-intensive projects, which are incompatible with the Paris Agreement objectives. Regarding the coal sector, this means that Aviva should publish a robust exclusion policy which covers all its assets, both at the Group level and at the asset management level.


  1.  Based on research by ‘Foundation Development YES – Open-Pit Mines NO’.