Insurance and asset management giant Aviva might consider a potential divestment action with regard to a pool of coal-exposed Asian companies, mainly in China and South Korea, according to the latest update to its climate change strategy.
In July 2015 Aviva singled out 40 companies with more than 30% in revenues earned from coal mining or coal power generation activity, granting them a year to cut carbon emissions under the threat of divesting.
During this time Aviva said it undertook “meaningful engagement” with the majority of them.
However, of those 40 companies, eight based in China and South Korea have not yet responded to Aviva’s calls and attempts to set up engagement meetings.
Besides the eight unresponsive companies, there are two “marked for divestment” due to their “further planned investment in coal capacity”.
Aviva said the names of those targeted companies won’t be disclosed ahead of a potential divestment action.
Instead it will continue its attempts to engage with the unresponsive companies and deferred any divestment decision till the first quarter of 2017.
“There is no greater risk to society than not tackling climate change – a central element of sustainability,” says Aviva group CEO Mark Wilson in the foreword to the report.“If we fail to tackle climate change we fail our customers, shareholders and society as a whole – now and in the future.” And Aviva Investors’ CEO Euan Munro, in the same report, argues that “failure to act on climate-related risks represents a failure to act in the long-term interest of investors”.
Aviva’s updated strategy on climate change comprises five pillars, of which the fifth one goes under the banner of “divesting where necessary”.
“If we fail to tackle climate change we fail our customers”
The other four pillars cover the following topics: integration of climate risk factors into investment decision-making; low carbon infrastructure investment through green bonds; climate change policy support and active climate risk stewardship, respectively.
Aviva’s updated strategy also noted: “As result of our broader engagement on climate risk we have removed or underweighted specific holdings from some of our active portfolios.”
Aviva Investors’ declared assets under management are over £318 billion as at 30 June 2016, from both its own main insurance business and external clients. Link