LONDON – Aviva Investors said Monday it could cease its equity and bond holdings in 30 of the world's largest corporate carbon emitters if their boards failed to take adequate action against climate change.
The move comes as asset managers, including BlackRock and Legal & General Investment Management, are seeking to increase pressure on companies to formulate a plan for the transition to a low-carbon economy ahead of the next round of global climate talks.
The British asset manager, part of insurance company Aviva and managing £ 355 billion in assets, said the Climate Engagement Escalation Program would target companies in sectors such as oil and gas, mining and utilities.
The program lasts between one and three years, depending on the specifics of the particular company. Aviva declined to name the companies concerned, but is a major shareholder in leading oil companies, including Royal Dutch Shell and BP.
One of the actions that Aviva expects from the companies is that they commit to emitting net zero carbon by 2050 and to ensure that their plan to do so is in line with the Science-Based Targets Initiative, a by NGO & # 39; s led group that subscribes to the business environment plans.
Companies should integrate climate goals into their business strategy, including investment plans; set short and medium term goals; align management compensation with objectives; and ensure that lobbying efforts support the goals.
"For our engagement approach to have an impact, it must be accompanied by a robust escalation process, including the eventual sanction of divestment," Mirza Baig, Global Head of ESG Research and Stewardship, said in a statement.
Progress would be monitored every six months, with escalation measures open to Aviva, including voting against directors at the companies' annual general meetings, filing shareholder resolutions, and working with stakeholder groups to apply pressure, it said. .
“This approach is fully supported by our investment teams,” said David Cumming, Chief Investment Officer for Equities at Aviva Investors.
"By fully integrating our approach into the stewardship and investment teams, we will enhance our ability to influence the companies we have focused on positive climate strategies."
(Reporting by Simon Jessop; edited by David Evans)
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