Aviva Investors Cuts Carbon Intensity of £47 Billion Real Asset Portfolio by 25%
Aviva Investors, the global asset management business of Aviva plc, announced today the publication of an update on its progress towards transitioning its £47 billion real assets platform to net zero, revealing that the company has achieved a near 25% reduction in the carbon intensity of its direct investments, and surpassed its five-year goal to finance £1 billion of climate transition-focused loans by 2025.
The announcement follows the launch last year by Aviva plc of a commitment to reach net zero Scope 1, 2 and 3 carbon emissions by 2040, and by Aviva Investors to reach net zero emissions across its real assets platform by the same year, with interim 2025 goals including investing £2.5 billion in low-carbon and renewable energy infrastructure, increasing low-carbon and renewable energy generation capacity to 1.5 GW, as well as reducing real estate carbon intensity by 30% and energy intensity by 10%.
Daniel McHugh, CIO, Real Assets, at Aviva Investors, said:
“The five interim goals of our Pathway are arguably the most important aspect of our commitment to net zero. They provide proof-points against which our progress can be measured and are designed to give clients confidence in the investments we make on their behalf, and their impact in supporting the transition towards a low carbon future.”
The new update highlights the company’s achievements against its 2025 interim goals, including financing £1.4 billion of low-carbon and renewable energy infrastructure and buildings, expanding total renewable energy capacity to 1.1 GW, originating £1.04 billion in climate transition-focused real estate loans, launching the Climate Transition Real Assets Fund, reducing carbon intensity by 25%, as well as decreasing energy intensity for direct investments by 6%.
The report also highlighted some of the challenges facing investors as they pursue net zero pathways. Key challenges include the lack of transparency, with little ESG-related data typically available in institutional private credit and real estate transactions, and a lack of green building stock, with intensifying competition for green assets leading to the emergence of a green premium. The company stated that it supports a “brown to green” transition of assets, rather than joining the large flows of capital chasing ‘already green’ assets.
In a post discussing the report, Edward Vaughan Dixon, Head of ESG, Real Assets at Aviva Investors, outlined some of the company’s ongoing initiatives and priorities going forward as it moves to address these challenges and advance its net zero goals. These include joining a group of major infrastructure lenders in order to launch an ESG covenant package, designed to develop a unified approach on ESG-related information and reporting requirements for infrastructure debt financings, focusing origination on both green and transition assets, and increasing its efforts to decarbonize existing buildings.
Amanda Blanc, Group Chief Executive Officer, Aviva plc, said:
“As a major investor in UK infrastructure and real estate, Aviva has a significant opportunity and responsibility to ensure we finance projects that help the built environment in its transition to net zero. So it’s encouraging to see this progress, however we still have a long way to go before we fulfil our sustainability ambitions. Our investors and customers expect leading results, and we will maintain a laser focus on delivering them.”