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Daily ESG Briefing: Aviva and BMO GAM set out 2022 engagement priorities

The latest developments in sustainable finance

Aviva Investors has said it will “hold boards and individual directors” to account if companies fail to meet its expectations. In his annual letter to Chairs setting out the £262bn asset manager’s engagement priorities for the year, Aviva CEO Mark Versey warned that companies should be including sustainability targets in executive pay packages, as well as retiring targets that are “fundamentally at odds with sustainability commitments”. In 2021, Aviva voted against a third of UK pay proposals and just over two thirds in the US, as well as opposing 137 directors over diversity and 85 over human rights concerns. Among the firm’s other engagement priorities this year are transition plans, biodiversity and human rights due diligence.  

BMO Global Asset Management has also set out its engagement priorities for the EMEA region. As with Aviva, climate change, biodiversity and ESG in executive pay feature heavily, with BMO also announcing an increased focus on chemicals companies as well as a focus on human rights issues in supply chains. In 2021, BMO’s EMEA responsible investment team engaged with 940 companies with 388 successful results. 

The £1.9bn Lambeth Council pension fund and £2.2bn Shropshire County Council pension fund have both announced net zero targets. Lambeth is targeting net zero by 2040 and plans to set interim targets for 2030, while Shropshire has committed to net zero by 2050, and will transition its £700m equity allocation from Legal and General Investment Management’s FTSE All World Fund to a low carbon alternative, also run by LGIM. It will also commit £130m to a sustainable equity fund run by the LGPS Central local government scheme pool.

Storebrand Asset Management has added agricultural traders Bunge and Archer Daniels Midland to its observation list because of their high exposure to deforestation risk from soy purchases. As a result of this, all portfolios will be unable to increase their holdings in the two companies and Storebrand will step up its engagement, targeting supply chain monitoring, forest restoration and ending relationships with suppliers engaged in deforestation.