Aviva Investors claims its real assets business has made “strong progress” against its net zero targets, having cut the carbon intensity of its portfolio while also ramping up its investments in green industries and renewable energy.
Last year, Aviva Investors outlined its plans to reach net zero emissions across its insurance business as well as its entire real assets platform by 2040, which included a series of interim climate goals the firm is aiming to achieve by 2025 in order to keep its decarbonisation plans on track.
In a report released yesterday by the firm, it claims to have invested directly in and financed £1.4bn of low-carbon and renewable energy infrastructure and buildings, which it said represented 56 per cent progress against a target of £2.5bn by 2025. The firm said it has also expanded total renewable energy capacity to 1.1GW, accounting for 48 per cent progress towards its commitment of reaching 1.5GW capacity by 2025. And, it claims to have already beaten its target to originate over £1bn in climate transition- real focused estate loans by 2025.
In addition, Aviva Investors said it had achieved a 25 per cent reduction in carbon intensity and a six per cent decrease in energy intensity for direct investments, against targets of 30 per cent and 10 per cent respectively by 2025.
“Net zero targets must move on from being pledges to attract investor capital and instead be grounded in action if the real assets sector is to fulfill its potential in tackling the climate crisis,” said Aviva Investors chief investment officer for real assets Daniel McHugh.
“The five interim goals of our pathway are arguably the most important aspect of our commitment to net zero. They provide proof-points against which our progress can be measured and are designed to give clients confidence in the investments we make on their behalf, and their impact in supporting the transition towards a low-carbon future.”
He continued: “Demand for more comprehensive sustainability data has risen and it is not inconceivable that even high-quality buildings in prime locations will become vulnerable to sustainability-related obsolescence.
“The importance of refurbishing and retrofitting of existing assets with energy-efficient materials and cleaner energy sources cannot be understated. Continuing variations and gaps in the quality of ESG data will cause polarization in the performance of assets, making investment expertise and rigorous analysis more important than ever.”
Aviva Investors head of ESG, real assets Ed Dixon added: “The focus on net zero targets has resulted in a lot of money chasing sustainable assets with attractive decarbonisation pathways, as investors try to lock-in short-term reductions in the carbon footprint of their portfolios.
“There is also an overreliance on energy performance certificates and green building certifications, neither of which are correlated to energy and carbon intensity. However, if the institutional investor capital is to be truly effective in supporting the transition towards a low-carbon future, it must be funnelled into more impact-based investment activities, such as improving existing buildings and infrastructure which underperform when it comes to energy efficiency and their ongoing carbon emissions.”
Aviva group chief executive Amanda Blanc added: “As a major investor in UK infrastructure and real estate, Aviva has a significant opportunity and responsibility to ensure we finance projects that help the built environment in its transition to net zero.
“It’s encouraging to see this progress, however we still have a long way to go before we fulfill our sustainability ambitions. Our investors and customers expect leading results, and we will maintain a laser focus on delivering them.”
A version of this article originally appeared at Professional Pensions.