UK-based international savings, retirement and insurance company Aviva announced that it has set a new 2050 net-zero carbon emissions target for its own auto-enrolment default pension funds, aligned with the Paris Agreement. The company also issued a call on the UK government to pass a law requiring auto-enrolment default pension funds to achieve net-zero carbon emissions status by 2050.

As part of the move to net zero, Aviva expects to invest over £5 billion into low carbon equities and climate transition strategies across its default funds over the next 18 months, potentially increasing the level of investment after that period. Aviva also stated that it will assess the feasibility of pulling forward its new net zero target to 2030, in-line with the Intergovernmental Panel on Climate Change (IPCC) 1.5-degree pathway.

Along with the new announcements Aviva revealed findings of its recent research, indicating that concern about climate change is particularly high amongst millennials, with 77% of those due to retire in the 2050s ‘concerned,’ with a third of them (35%) saying they are extremely concerned. Accordingly, more than half of millennials reported awareness of ESG and ethical investing, and 43% reported being aware that how their pension savings are invested can significantly impact issues, such as climate change.

Aviva’s call on the UK government to require auto-enrolment default pension funds to achieve net-zero carbon comes as the Pension Schemes Bill is about to go before the House of Commons for its second reading.  As the company notes, however, the Bill only states that pension funds in the UK should disclose how they will assess and report on their exposure to climate change, and does not currently set out a specific target or net zero timeline.

Lindsey Rix, Chief Executive Officer of Savings and Retirement at Aviva, said:

“We are working hard to offer more customers a simple and effective way to invest their money in a way that helps them to save enough for their retirement whilst also being good for the environment.

“We believe now is the time to go further. Climate change poses a significant risk to people’s pension savings and our research shows that people want pension funds to help tackle climate change and want the government to act. This is particularly true for those due to retire in the 2050s.

“That is why we are setting a target for our own auto-enrolment default funds to be net-zero by 2050. We also want to progress towards the net-zero target as quickly as possible and we are exploring the feasibility of a 2030 target in line with the IPCC’s 1.5-degree pathway. This is a challenging target, but we believe it is the right thing to do.

“However, if the UK is to meet its climate change targets, others must act too. We therefore call on Government to legislate to ensure that all auto-enrolment default pension funds become net-zero by 2050.”

Richard Curtis, co-Founder of responsible pension investment campaign Make My Money Matter said:

“We welcome Aviva’s leadership with the important commitments made today. With two of the UK’s leading pension funds now committed to Net Zero, that’s 13m pension pots tackling the climate emergency.  However, there’s much more to do. That’s why Make My Money Matter is calling for all pension funds to match Aviva’s leadership and commit to net zero, with a halving of emissions by 2030.

“That’s the only way to ensure that our pensions are not only saving for our futures, but building a world fit for our retirement.”