Aviva under fire over coal engagement

£352bn investor accused of lack of ‘substantive progress’

Aviva’s use of corporate engagement to reduce coal and tar sands exposure – and honour its commitment to the Paris climate goals – was criticised by campaigners from Unfriend Coal at its AGM yesterday.
The NGO’s campaigners, backed by a number of environmental organisations such as ClientEarth and 350.org, attended by proxy the meeting in London, which gave them the opportunity to ask questions to Sir Adrian Montague, Chairman of Aviva plc.
Lucie Pinson, Senior Campaigner at the Sunrise Project and Friends of Earth France, asked why Aviva didn’t limit its engagement to companies with the genuine potential to transition away from coal. She also suggested it should automatically divest from those that plan to build new carbon-intensive projects.
Pinson is the author of a report entitled “Aviva and coal: A very long engagement” in which the British insurer and asset manager’s exposure to coal and tar sands is explained.
According to the report, Aviva has $621m invested in coal plant developers, 11 of which plan to build more than 90GW of new coal power. To meet Paris targets, a reduction of 100GW of coal capacity per year should be in place, the report saying, citing a study by CoalSwarm.
That figure includes assets managed for third parties, and is broken down as follows: $528m in equities and $93min bonds.
Five of the companies planning new coal plants are within the EU, and the report highlights that Aviva’s holdings of Polish coal companies grew from €310m to €422m in the year to 2017.
In addition, the report said Aviva holds $22m in China’s Huaneng Group and $26m in India’s National Thermal Power Corporation.
Pinson’s report also listed more than $634m in corporations operating or planning to build projects to exploit tar sands in Canada.
“Engagement is inherently non-transparent and Aviva has not been able to report any substantive progress through its engagement strategy,” the report stated. It added: “Further investments in these companies are an entry ticket to a 4°C world”.Unfriend Coal stressed that Aviva’s peers such as AXA, which it says divested close to £ 3bn from coal and oil sands, and Allianz, which recently made a new commitment to exiting coal), have taken a divestment-focused approach.
So far Aviva, Pinson’s report states, is divesting £11m from 15 coal companies, including six unnamed Chinese and two unnamed Indian companies. Aviva had divested from other two companies: Poland’s PGE and Japan’s utility J-Power.
Another question at the AGM was put by Jan Chudzyński, from the foundation Development YES – Open-Pit Mines NO, also part of the Unfriend Coal campaign.
Chudzyński asked why Aviva didn’t apply its divestment policy to both its own assets and third-party assets. He raised this issue as Aviva still holds €122m in PGE via its Polish pension fund.
Pinson’s report explained that although local pension funds must invest 70% of their portfolio in Polish assets (zloty denominated), the Polish law doesn’t determine the level of investment in companies listed on the Warsaw Stock Exchange. 
In that respect, the report compared Allianz’s pension fund, which invested 1.94% of its pension customers’ assets in Polish coal companies, with Aviva’s 4.42%. 
In response to the report from Unfriend Coal, Steve Waygood, Chief Responsible Investment Officer at Aviva Investors, told RI: “We welcome this report from Unfriend Coal and we agree on a great deal. But we fundamentally believe that, as investors, we can play an active role in driving change and helping these companies move into low carbon and renewable energies. We know that engagement can be a more powerful tool for change than simply walking away. 
“We actively engage with the coal companies we invest in, encouraging them to meet the standards we expect in climate change. Where those expectations are not met, and where clients have given us the discretion, we will divest.” 
Waygood added: “We do not consider divestment as a badge of honour, but rather a failure of engagement.”