Aviva AGM: insurer invests in new coal, ignores exit opportunities

May 22, 2019

Aviva will be shown up at its AGM tomorrow for ignoring opportunities to exit the Polish coal sector. Unfriend Coal campaigners will be attending the AGM.

In December 2018, Aviva’s open pension fund (OPF) held £214m in Polish coal companies, ENEA, Energa, JSW, LW Bogdanka, PGE, Tauron, ZEW Kogeneracja and ZEPAK. While its coal investments have changed little year on year, the insurer has increased holdings in JSW and LW Bogdanka.

LW Bogdanka is a hard coal mining company, part of ENEA S.A. state-owned energy utility, currently developing the Ostrów deposit that will expand the life of the mine by 50 years according to the company strategy.

New data provided to shareholders ahead of the AGM shows that Aviva still holds £78.5m shares in PGE and £21m shares in ENEA despite the fact that both companies are pursuing active coal expansion plans:

  • ENEA continues construction of the Ostroleka C power plant.
  • PGE is expanding its coal plant and mine at Turow.

In 2018, Aviva responded to the Unfriend Coal critique of its Polish coal investments saying: “The investment guidelines focus on domestic equity where the energy industry is the second largest after the banking sector.”

However, a new briefing by IEEFA published today explains how insurers’ arguments for remaining in Polish coal no longer stack up, identifying clear opportunities to reduce coal exposure while continuing to invest in Polish equity through:

  •         Low carbon indices from off-the-shelf index providers such MSCI, Morningstar, S&P.
  •         Bespoke indices crafted by insurers to exclude the most carbon intensive Polish companies.
  •         OPFs are only required to allocate a minimum of 15% of total assets to local and overseas equities (Allen&Overy).

Data published in November 2018 by Profundo revealed that Aviva’s coal activity was not limited to Poland. The insurer held £340m in the top 120 coal plant developers, including £115m new  investments made that year.

Unfriend Coal campaigners have sent a letter to Aegon, Allianz, Aviva, AXA, Generali, Metlife, NN, PZU calling them to use these “opportunities at the disposal of investors that are concerned by managing coal-related climate risks”.

Lucie Pinson, European Coordinator of the Unfriend Coal Campaign, said: “Aviva cannot boast of being a climate leader while ignoring all opportunities at its disposal to reduce its exposure to Europe’s worst climate offenders. Anyone concerned about mitigating coal-related risks would stop making new investment into this polluting industry, but Aviva is doing the exact opposite with the purchase of new shares in some Polish coal companies. This is not specific to Poland as data from Profundo revealed that the insurers made $145m new investments into companies planning new coal plants worldwide in 2018.”

Kuba Gogolewski, campaigner for the Foundation Development YES – Open-Pit Mines NO, Poland: “So far the climate leadership of Aviva in Poland is nothing more than empty promises. Aviva manages the second largest privately managed pension fund in Poland by value of assets. It has a lot of influence on all the companies it is invested in. Yet it does not use its power to publicly guide the most carbon intensive coal companies in its portfolio such as ZE PAK, PGE or ENEA to adopt Paris compliant strategies. It keeps silent during their AGMs and does not advocate for policy changes in the Polish media. It has also not used the space to publicly advocate for the Paris complaint reform of the system.”

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