Aviva Investors ties 5% of investment desk heads’ salaries to ESG integration

Fund manager recruits network of internal RI Officers to back implementation

Aviva Investors, the £260bn UK fund management house, has become one of the first large mainstream asset managers to make the integration of environmental, social and governance (ESG) factors into investment decisions part of the pay criteria of its main investment desk heads. Aviva’s London-based investment desk heads who oversee each asset class that the fund manager runs will have 5% of their basic salary determined on the application of ESG factors into their investment strategies. A part of their bonus will also be based around a scorecard of milestones on ESG integration. The decision comes just six months after Aviva Investors sold its seven-fund, £1.2bn (€1.5bn) specialist Sustainable and Responsible Investment team to Alliance Trust for £1m and said it would instead focus on integrating ESG research across all of its assets.
Aviva told Responsible-investor.com that it had now established a nine-person Global Responsible Investment team, which includes Nathan Leclercq, 
Head of Corporate Governance, and Anita Skipper, the respected corporate governance specialist. In addition, it has identified a dozen more internal ‘Responsible Investment Officers’, London based fund managers and analysts, that will spend a few days per month supporting the integration of ESG across all of the fund manager’s investment desks and backing the investment heads. The Responsible Investment Officers will also have part of their annual compensation linked to the results and can potentially receive an extra bonus of 10% from the fund manager’s central bonus pool based on meeting Aviva’s ESG implementation targets.Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, who reports directly to Paul Abberley, Aviva Investors’ interim Chief Executive, said the structure of internal Responsible Investment Officers and the related compensation criteria would be rolled out across the fund manager’s other operations globally as soon as practicable.
He said the remuneration move reflected both Aviva Investors’ own corporate responsibility identity as a long-term investor and the business rationale of an investment differentiator in a market where many large pension funds were increasingly demanding to see their manager’s ESG implementation in practice as a result of signing up to initiatives such as the Principles for Responsible Investment (PRI). Aviva Investors chief Abberley sits on the PRI Advisory Council.
Waygood said: “I think that the most significant motivating factors for individuals working within the financial services industry are organisational culture and their own personal values and incentive structure. I think it is critical that genuine ESG integration into investment decision-making is supported by culture and incentives in this way.”
He said Aviva Investors was also recruiting two new support staff for his own enlarged role at the manager, a new Head of Integration, to be named shortly, and a Head of Engagement, which will be advertised soon.