Aviva calls for supportive policy debate on climate and nature

By Rebecca Delaney

March 5 - (The Insurer) - Aviva group CEO Amanda Blanc has highlighted the need for a "supportive" policy environment at a national and international level to achieve private sector energy transition plans.

In the second iteration of its transition plan, Aviva highlighted the role insurers and long-term investors can play in helping customers to manage risks related to both climate and nature, but added that a supportive policy and regulatory environment is critical.

"Achieving this is not straightforward, particularly with recent geopolitical headwinds. It is important for us to participate actively – which we do – in the policy debate around climate and to engage with other stakeholders, including our peers and the companies we invest in."

Aviva said that external dependencies and assumptions built into its transition plan include macroeconomic factors such as the geopolitical environment. A key assumption in Aviva's transition plan is a cooperative global geopolitical environment in which governments transition in line with the goals of the Paris Agreement.

Within the transition plan, Scope 3 category 15 refers to Aviva's investees’ and insurance customers' Scope 1, 2 and 3 emissions. Their respective Scope 3 emissions (‘Scope 3 of 3’) includes the emissions of their suppliers and customers, which presents significant challenges around accurate measurement.

The UK insurer's latest plan recognises that there is currently no route to net zero for 'Scope 3 of 3' emissions.

"While greenhouse gas data availability is improving, it is still of low quality and methodologies are developing," said the report.

"Additionally, when these emissions are aggregated at a portfolio level, it introduces significant double counting. Based on what we understand today, and the low degree of influence we have over these emissions, we do not currently see a route to net-zero for these emissions."

Aviva's net-zero ambition covers general insurance underwriting activity and the claims supply chain, with the firm working to include its UK health insurance business.

The group has also disclosed that it is exploring opportunities in UK commercial lines to create models to assess underwriting-based emissions where customer data is available, with an initial focus on building a model to apply the Partnership for Carbon Accounting Financials personal motor insurance methodology for commercial vehicle fleets.

Aviva has an interim ambition to grow GWP in renewables to 73 million pounds in the UK and C$10 million in Canada by 2027, which it said it is currently on track to achieve.

The UK insurer also reported that it has reduced its Scope 1 and 2 emissions by 51% since 2019, with plans to reach a 90% reduction by 2030.

To date, Aviva said it has reduced the Scope 1 and 2 carbon intensity of its corporate bond and equity portfolio in shareholder and with-profit funds by 64% compared to a 2019 baseline. It has also included additional asset classes and funds within the 2030 portfolio decarbonisation ambition.

As the first plan to integrate climate and nature strategy, Aviva has pledged to undertake a group-wide exercise later in the year to identify and assess nature-related dependencies, impacts, risks and opportunities across its investments, underwriting and operations.

This will be accompanied by internal education and training, including among those in senior and decision-making positions, with plans to conduct deep-dive board training covering nature in 2025.

"The global transition cannot focus solely on decarbonisation to be successful and sustainable," Blanc added. "It is increasingly clear that nature, adaptation and social dimensions are rapidly becoming strategic priorities within the private sector and we are incorporating these considerations into our integrated sustainability approach."