Updates

Aviva and Coal: a very long engagement

May 10, 2018

Funding for developers planning 90GW of new coal power at odds with insurer’s climate commitments

 

Download the briefing (PDF) – Aviva and Coal: a very long engagement

Aviva has more than £920 million invested in companies developing new coal projects and operating in the tar sands industry, despite its support for the Paris Climate Agreement, Unfriend Coal campaigners warned today.

In a briefing released ahead of the insurer’s annual general meeting they said its policy of engaging with companies to drive change had had “no meaningful successes” and that as of November 2017 Aviva was financing developers planning to build 90GW of new coal power.

Aviva began engaging with 40 coal companies in 2015, and this included asking whether they had “any plans for new investment in coal generating capacity, as we believe this in particular would go against our approach to helping meet the Paris Agreement of limiting global temperature rise to well below 2 degrees Celsius”, according to the insurer’s climate-related financial disclosure 2017.

“Where we don’t see any prospect of movement then we will divest,” it adds. In September 2017 it added two companies to its Investment Stoplist, Japanese Utility J-Power and Poland’s PGE, “and divested our active beneficial holdings wherever possible.” It is in the process of divesting £11 million from 15 more companies. [1]

However, in November 2017 the insurer was the second biggest investor in PGE with £146 million ($198 million) of shares, including £90 million ($122 million) through its Polish pension fund OFE. PGE is Europe’s second biggest CO2 emitter and the continent’s largest coal power developer, with plans to build 5.2GW of new coal plants.

Lucie Pinson, Unfriend Coal’s European coordinator and author of the briefing, said: “The sums Aviva is divesting are trivial compared with the huge financial support it is giving to coal and tar sands companies undermining the fight against dangerous climate change. This is at odds with Aviva’s commitment to the Paris Agreement and it should prove that it is serious by divesting from companies unless they commit to rapid and meaningful change.”

The briefing from NGOs supporting the Unfriend Coal campaign reveals that:

  • Aviva has £458 million ($621 million) invested in 31 coal plant developers, including 11 which plan to build more than 90GW of new coal power – more than six times the British coal fleet.
  • Aviva’s Polish pension fund OFE has increased its holdings in Polish coal companies, which plan more than 8GW of new coal power plants, from £272 million in 2015 to £371 million in 2017 (€310 to €422 million).
  • Aviva has £19 million ($26 million) invested in India’s National Thermal Power Corporation, which plans to build 38GW of new coal power, making it the world’s biggest coal plant developer.
  • Aviva has over £469 million ($634 million) invested in companies operating in Canadian tar sands or planning to build major tar sands pipelines.

Last year the UN called for no new coal-fired plants worldwide and an accelerated phase-out of existing plants as key steps to achieve international climate goals. [2]Oil from tar sands is carbon-intensive and research has found no new fossil fuel extraction is needed in a world committed to the Paris climate target. [3]

Sixteen major insurers have announced plans to divest more than £16 billion from coal. AXA has announced that it will divest from companies which plan to develop new coal projects, as well as from major pipelines and tar sands production companies.

Aviva and Coal, A Very Long Engagement identifies three major weaknesses in Aviva’s climate strategy.

Engagement. The briefing says: “Continuing to finance coal and tar sands might be worthwhile if Aviva’s engagement produced clear progress towards an exit from these fuels. Yet so far Aviva has not been able to produce meaningful successes through its engagement strategy.”

Unfriend Coal says the insurer should focus on a small number of companies with real potential to transition away from coal and tar sands within a year. It should automatically divest from companies planning new carbon-intensive projects as these are unlikely to align with Paris climate targets.

Polish Coal. Aviva claims that Polish law requires its local pension fund OFE to invest in Polish coal companies. However, the briefing reveals that, although local pension funds must invest 70% of their assets in assets denominated in Polish currency, the law does not set a level of investment in individual companies. It contrasts Aviva’s OFE, which has 4.42% of its customers’ assets invested in Polish coal, with Allianz’s Polish pension fund, which has just 1.94% invested in the sector.

Unfriend Coal calls on Aviva to make use of flexibility in the pension funds law.

Third party assets. Aviva does not apply its divestment policy to assets it manages for third parties and the briefing suggests that this may be part of the reason why it continues to be so heavily invested in companies actively developing coal power.

Unfriend Coal calls on Aviva to follow investors like AXA and Zurich and apply its divestment policy to both its own assets and third party assets.

ENDS

For further information, pictures, graphics and to arrange interviews, please contact:

Will Aitchison                           william.aitchison@greenhousepr.co.uk                         +44 (0) 7412 872453

David Mason                             david.mason@greenhousepr.co.uk                               +44 (0) 7799 072320

 About Unfriend Coal

 The Unfriend Coal campaign brings together a global network of NGOs and social movements calling for insurance companies to divest from and cease underwriting coal and support the transition to clean energy. The campaign is supported by 350.org, CIEL (US), ClientEarth (UK), Foundation Development YES – Open-Pit Mines NO (Poland), Friends of the Earth France, Greenpeace Switzerland, Market Forces (Australia), Rainforest Action Network (US), Re:Common (Italy), The Sunrise Project (Australia), Urgewald (Germany) and the Waterkeeper Alliance (US), among others.

They are calling on all insurers to end cover for all new and existing coal plants, mines and associated infrastructure projects. They are also calling on insurers to adopt divestment criteria based on the Global Coal Exit List. Insurers should divest both their own assets and assets managed on behalf of third parties from all companies which:

  1. plan investments in new coal power plants, mines and associated infrastructure;
  2. generate more than 30% of power from coal or have more than 10 GW of installed coal power capacity;
  3. derive more than 30% of their turnover from coal or produce more than 20 million tonnes of coal a year.

[1]Aviva’s climate-related financial disclosure 2017. Aviva has told Unfriend Coal it is divesting £11 million from the 15 companies.

[2]UNEP, The Emissions Gap Report, 2017

[3]Oil Change International, The Sky’s Limit, Sept 2016

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