Aviva has been loudly advertising its pledge to align with the Paris climate goals and achieve net zero emissions by 2040. However, longer term commitments will not be enough to avoid a temperature rise above the 1.5°C critical threshold if we don’t also drastically reduce coal, oil and gas production by 2030. Aviva needs to come to COP26 summit in Glasgow with a concrete and robust plan to phase out its fossil fuel habit. Aviva’s AGM today offers a timely opportunity to take a closer look at the gaping holes in its policies.
Aviva’s inaction called out (too) many times
Aviva is at once a top insurer worldwide, a major asset owner and a major asset manager in the UK, with US$458 billions under management in 2020. Its policy decisions can have a massive impact on financial flows, aligning them with the 1.5°C pathway or on the contrary steering them towards climate chaos. To maintain a 50% chance of limiting global warming at 1.5°C, fossil fuel production must drop by 6% annually until 2030. This means Aviva needs to start cutting down its massive support to the fossil fuel industry, this year and no later.
Unfortunately, numerous reports demonstrate that Aviva is not adequately addressing climate change. Last November, in the Insurers ScoreCard, Aviva scored only 1 out of 10 for its fossil fuel underwriting activities, and 0 for its investment activities. The same goes for its asset management activities. In the report Slow Burn: the asset managers betting against the planet, Aviva Investors Group’s policy was deemed “very poor” and scored a lowly 23 points out of 100. According to our latest report published this week “City of Coal, the climate crimes of UK finance”, Aviva is the 8th biggest UK investor in companies listed in Urgewald’s Global Coal Exit List (GCEL).
Aviva is still dragging its feet when it comes to exiting coal
Aviva investments branches hold more than $1.7 billion in assets in 127 coal companies, an enormous amount. Last year, Aviva supported companies that, in total, mined more than 2400 million tons of coal and operated 492 GW of coal power plants. This is the equivalent of the total coal power capacities of India, the United States and Indonesia combined.
Aviva has committed to exclude, from 2023 onwards, companies deriving more than 5% of their revenues from coal but this pledge comes with a major loophole allowing Aviva to keep supporting companies if they have signed up to the Science-Based Targets initiative (SBTi). This is a major shortcoming considering the recent approval by the SBTi of German utility RWE’s climate target despite its plans to continue to burn coal in Germany until 2038, eight years later than the 2030 deadline required by climate science.
What’s more, Aviva will not be applying this strict 5% exclusion until 2023, which is too late given the climate emergency we face. In the meantime, Aviva will:
-
still be able to invest in global coal producers and important coal utilities, such as Duke Energy ($93m), Glencore ($60m) or PGE ($46m).
-
still be able to invest in all 437 coal companies listed as “coal developers” in the GCEL, such as the Adani Group, in which it has recently acquired almost $11m in holdings.
The exclusion of all coal developers represents the litmus test to assess the credibility of any climate announcement and must be a redline for Aviva. As a member of the Powering Past Coal Alliance, Aviva must simply do better, have zero tolerance for companies with coal expansion plans and suspend all financial support for companies that don’t have a clear asset-based plan to phase out coal by 2030.
Oil and gas expansion: the sky is the limit
The same goes for oil and gas. Aviva has not announced any restrictions on developers, and can even keep supporting expansion plans in the high–risk oil and gas activities such as tar sands, shale oil and gas, oil and gas drilling in the Arctic region, etc.
Unfortunately, the baby steps Aviva committed to last February will not be enough. If Aviva does not want to join the club of net zero greenwashers at the COP26 in Glasgow, it must commit to ditch fossil fuel developers, starting with coal and unconventional oil & gas.