Aviva Investors has launched two new impact funds, focused on delivering positive social and environmental change alongside long-term capital growth.
The Aviva Investors Social Transition Global Equity Fund and its Natural Capital Transition Global Equity fund are part of the company’s sustainable transition range.
This range of funds is underpinned by the United Nation’s Sustainable Development Goals (SDGs).
These two new funds will invest in companies that are managing their social and environmental impacts and providing solutions to support the transition to a lower carbon economy. Active ownership and macro stewardship are key parts of the strategy to drive change by engaging with companies in the funds, and with policymakers to reform markets.
Aviva said that social inequality and biodiversity loss are major issues. It points out that the majority of the global population lives in countries where the wealth gap is growing and there has been a 68 per cent decrease in species populations between 1970 and 2016.
Aviva Investors chief executive officer Mark Versey says: “As well as growing their wealth, people want to know that their money is making a positive contribution to climate change, a fairer society and protection of the natural environment. The two objectives are equally important and aligned, we call this investing with purpose.
“There has, quite rightfully, been much focus on the path to net zero carbon emissions during the UN Climate Change Conference (COP26), but we should not forget that social issues and biodiversity are also important drivers of the transition to a fair and sustainable economy.”
The Social Transition fund will select investments that are changing their business models to respect human rights, promote decent working conditions and engage in responsible corporate behaviour. The fund will also invest in companies that provide solutions towards improved access to education and health and wider financial inclusion. Businesses in breach of established social principles, or those involved in severe social controversies, will be excluded.
The fund builds on the social transformation framework created by the World Benchmarking Alliance to assess companies’ social performance. The WBA is an initiative that Aviva helped create in 2018 to publicly rank companies’ performance on the SDGs and provides accountability mechanisms that create a race to the top on sustainability. The fund will also donate 5bps of its management fee to social impact projects.
The Natural Capital Transition fund will invest in companies that provide solutions and are transitioning their business models across the themes of sustainable land, sustainable oceans, the circular economy and climate change. It will exclude firms involved in certain harmful activities or severe environmental controversies. The launch coincides with the publication of Aviva’s biodiversity policy, which includes the commitment to use best efforts via engagement and stewardship to eliminate commodity-driven deforestation activities at the companies in the group’s investment portfolio and financing activities by 2025.
