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Aviva Annual General Meeting analysis

Aviva was asked during its AGM to complement its engagement with a consequential divestment approach, focusing its engagement on a small number of companies and divesting from others, starting with companies expanding their activities in carbon-intensive sectors such as coal and tar sands.

In response, Sir Adrian Montague, Aviva’s Chairman stated coal was a big market failure and acknowledged insurers had to take action. But for the UK insurer, engaging with companies means taking action.

We reminded Aviva that all the good will in the world would be insufficient to enable the insurer to engage effectively with all the companies in its portfolio. There are 282 companies developing new coal plants and more than 700 companies heavily exposed to coal and/or expanding their activities in the coal and tar sands industries. Aviva has not been able to demonstrate meaningful successes through its engagement strategy. Tar sands is currently neither a topic for engagement nor divestment.

Moreover, if engagement can in some circumstances be a useful strategy with fossil fuel companies in order to convince them to align their activities with  the climate targets of the Paris Agreement, companies which are expanding their activities in carbon-intensive sectors such as coal and tar sands show they are not even committing to align with these targets.

There is no reason why an investor would have to choose between engagement or divestment, the two approaches can and must complement each other.  Aviva is not the only insurer engaging with fossil fuel companies, the Climate Action 100+ gathers many of the major insurers and investors.

But contrary to other insurers such as Allianz that, in addition to their engagement strategy, has adopted divestment criteria which will lead to them divesting from hundreds of companies and to the exclusion of even more companies from their investment universe, Aviva  has divested only 2 companies and is in the process of divesting 15 more companies.

AXA has divested close to £3 billion from coal, a stark contrast with Aviva’s minimal action. No figure has been announced for the divestment from PGE and J-Power and only £11 million will be divested from the 15 extra companies.

When confronted with these figures, the Chairman replied that he didn’t oppose them and was willing to discuss what he calls “the details” both on coal and on tar sands after the AGM. Coal and tar sands are extremely carbon-intensive and fuel runaway climate change which brings misery to millions of people, and are linked to serious violations of human rights. These “details” affect the lives of so many.

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