Aviva to decarbonize defined contribution portfolios

Aviva plans to invest more than £5 billion in climate-transition strategies

Aviva plans to invest more than £5 billion ($6.5 billion) in low carbon equity and climate-transition strategies over the next 18 months, as it seeks to decarbonize its defined contribution portfolios by 2050.

Aviva unveiled a policy Friday for its DC portfolios to achieve net-zero carbon emissions as it called on the U.K. government to require default DC arrangements to eliminate carbon dioxide emissions from their investments under new legislation. The upcoming Pension Schemes Bill, which is set for a second reading at the U.K. House of Commons on Oct. 7, in its current form specifies only reporting requirements but not action that investors and investment firms should take.

Aviva additionally set a 2030 deadline to significantly reduce carbon emissions in its £32 billion DC default portfolio. The target follows the recommendations by the United Nations' Intergovernmental Panel on Climate Change.

According to research by Censuswide, conducted Aug. 24 to Aug. 26 that was commissioned by Aviva and published Friday, 59% of interviewees find it important that pension funds decarbonize by 2050 and 56% agree the government should require default funds to achieve net-zero carbon emissions status by 2050.

We 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 1.5-degree (Celsius) pathway. This is a challenging target, but we believe it is the right thing to do, Lindsey Rix, CEO of savings and retirement business at Aviva, said in a news release, adding that others must act too.

Total DC assets managed by the firm's workplace savings and retirement business stood at £71.7 billion as of July 31.