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Environmental campaign group Unfriend Coal has delivered fresh criticism to Aviva after the insurer defended its strategy of engaging with coal companies amid ongoing controversy over European insurers’ involvement in the industry.
In response to a report from Unfriend Coal, which said Aviva’s policy of driving change through engagement had resulted in “no meaningful successes,” the insurer told Insurance Business last week that it believes engagement will have the most impact and does not consider divestment a “badge of honour.”
Steve Waygood, Aviva’s chief responsible investment officer, said that the firm believes, as an investor, it can play an active role in driving change and helping coal companies move into low carbon and renewable energies.
“We know that engagement can be a more powerful tool for change than simply walking away,” Waygood commented.
But Unfriend Coal has hit back at the insurer’s line of defence and called for the firm to release more information on the successes it says it has had.
“One must question the lack of engagement success reported by Aviva and why the group is not disclosing any information regarding the changes that its so-called powerful engagement approach has made possible,” Lucie Pinson, senior campaigner at the group, told Insurance Business.
In response to Unfriend Coal’s latest report, Aviva disclosed its progress with Italian utility firm Enel, which says it will not build another coal plant after its latest coal-fired power station opened in Chile in 2016.
However, Pinson said that the insurer should go further in reporting change that has come about as a result of the strategy.
“Without naming any names, it should be possible to disclose what kind of changes were made possible, for example, how many MW of new coal capacity were cancelled or brought offline,” she said.
Pinson also criticised Aviva’s assertion that it is encouraging the coal companies it invests in to meet the climate change standards it expects.
“This is not correct. Financial research on Aviva’s exposure to 120 companies developing new coal plants found that Aviva held investments in 31 of them. These 120 companies account for less than one sixth of the number of companies listed in the Global Coal Exit List, which itself does not cover all companies active in the coal sector,” she said.
“Therefore, it is almost certain the 40 companies Aviva engages with do not represent all the companies Aviva invests in. Maybe it is time for Aviva to change its expectations.”
In response, Aviva told Insurance Business that if those investors that care about climate change walk away, then “only investors who don’t care are left at the table.”
“The reason we have chosen not to publish many of the details of our engagement is that we did not want to harm our ability to secure meetings with companies on what is a highly controversial topic for them. However, we know our engagement approach is making a useful contribution to encouraging companies in need of the greatest scrutiny to transition towards a more sustainable future,” the insurer said in a statement.
“For example, of the companies we have engaged with, two companies have committed to no further capital expenditure on coal and five companies have committed to targets to reduce their GreenHouse Gas (GHG) emissions to be aligned with the Paris agreement.
“There are companies that have not been responsive to our engagement, which is why we will be divesting a further 15 companies from our portfolio. A further six companies have been classified for a final approach from us, we will then move to divest. Once we have divested, we will disclose the names of these divestments. But we do not consider divestment as a badge of honour but rather a failure of engagement.”
