AvivA And CoAl A very long engAgement

May 2018

© pixabay.com

AvivA

An

d Co

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g E

ng

agem

ent coal

23

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

Mo

re

th

an

85

0 in

stit

utio

ns, in

clu

din

g m

ajo

r in

su

ra

nce

co

m-

panies, have supported this effort by divesting assets from

coal and other fossil fuel com

panies6. In

su

re

rs A

llian

z a

nd

AXA

have specifically announced that they w

ill divest from

companies w

hich plan to develop new coal projects, and

AXA

also comm

itted to divest from m

ajor pipelines and tar sa

nd

s p

ro

du

ctio

n c

om

pa

nie

s.

In 2015, Aviva “identified 40 companies (C40) w

ith more than

30% of their business revenue associated w

ith thermal coal

mining or coal pow

er generation and undertook focused en-gagem

ent with them

, including 51 in-depth conversations ”.

Up to now

, Aviva has divested from

only two of them

, the Japanese utility J-Pow

er and the Polish PGE, and is in the

process of divesting assets totalling £11 million from

an ad-

dit

ion

al 1

5 c

om

pa

nie

s, including six from

China and nine from

other countries7.

Un

like

Z

uric

h,

AX

A a

nd

o

th

er in

ve

stm

en

t m

an

ag

ers,

Av

i-

va does not include any of the assets it manages for third

parties in its divestment. This is another lim

itation of the insurer’s approach to coal com

panies and may explain w

hy the am

ount covered by its new round of divestm

ents is so sm

all.

Engaging fossil fuel companies can be a useful strategy to accel-

erate the transition to a low-carbon econom

y. Yet any such en-gagem

ent needs to be intense, time-bound and linked to clear

consequences in the absence of positive results. It is time for

Aviva to speed up its transition away from

coal and tar sands and expand its divestm

ent from respective com

panies.

As Helena M

orrissey, the head of personal investing at Legal and G

eneral Investment M

anagement, one of Europe’s biggest

investment m

anagers, recently said: “The reason we are sham

-ing [the w

orst performers] is that w

e gave them a num

ber of years and they did not take any notice. There com

es a time

when w

e should vote with our feet. W

e will be divesting from

those com

panies.” 8

Engagement is inherently non-transparent and Aviva has not

been able to report any substantive progress through its en-gagem

ent strategy. Going forw

ard, the insurer should focus its engagem

ent on a small num

ber of fossil fuel companies,

selected because of their real potential to transition away

from coal and tar sands w

ithin one year, in line with the

Paris Agreem

ent. Because companies still planning new

carbon-intensive projects are unlikely to align w

ith Paris clim

ate targets, Aviva should autom

atically divest from

th

em

.

Left unch

ecked, clim

ate chang

e w

ill render

signifi

cant portions of th

e econom

y uninsurable, shrinkin

g our

add

ressable m

arket.

Av

iva

wa

rn

ed

in it

s 2

01

5 s

tra

te

gic

re

sp

on

se

to

clim

ate

ch

an

ge

1

© p

ixa

ba

y.c

om

Europe’s fifth biggest insurer recognises the risk that clim

ate change poses and has comm

itted to supporting the developm

ent of a low-carbon econom

y. It has de-clared its support for the 2015 Paris Clim

ate Agreement

including its goal of keeping global warm

ing “well be-

low” 2°C above pre-industrial levels. H

owever, Aviva still

actively supports coal and tar sands companies w

hose activities are fueling dangerous global w

arming.

Thermal coal is the largest single source of carbon

emissions. Last year the U

N called for no new

coal-fired plants w

orldwide and an accelerated phase-out of ex-

isting plants as key steps to achieve international cli-m

ate goals2. In order to m

eet the Paris target, 100 GW

of w

orldwide coal capacity m

ust be retired every year 3.

Ye

t a

t t

his

tim

e, A

viv

a h

as $

62

1 m

illion

inv

este

d in

31 coal plant developers, including 11 which plan to

build more than 90 G

W of new

coal power. A

mong

them are fi

ve companies planning new

coal plants w

ithin the European Union, starting in Poland. A

vi-v

a h

as in

cre

ase

d it

s h

old

ing

s in

Po

lish

co

al c

om

pa

-

nies, which plan m

ore than 8 GW

of new coal plants,

from €310 m

illion in 2015 to €422 in 2017.

On top of this, A

viva also has over $634 million in

-

ve

ste

d

in

co

mp

an

ies

op

era

tin

g

in

Ca

na

dia

n

ta

r

sands or currently planning to build major tar sands

pipelines. This industry is highly carbon-intensive, e

nv

iro

nm

en

ta

lly

de

stru

ctiv

e

an

d

th

re

ate

ns

th

e

health and lifestyles of Indigenous comm

unities, yet there are plans to expand production by 70%

by 2040. Research by O

il Change International found that investm

ent in new tar sands production is inconsistent

with the Paris Agreem

ent 4.

Global w

arming has reached 1.1°C and is already caus-

ing severe disruption. In 2017, natural catastrophes such as hurricanes H

arvey, Irma and M

aria, wildfires

and other weather-related events cost the w

orld $330 billion, leaving insurers w

ith record losses of $144 bil-lion according to Sw

iss Re. The company w

arned that global w

arming w

as increasing the frequency of these events and that future losses to insurers could top $250 billion in a single year 5.

The Paris Agreement recognizes that a crucial step for

achieving its goals is to “shift the trillions” from fossil

fuels to energy efficiency and renew

able energy.

exeCu

tive sum

mA

ry

AvivA

An

d Co

Al : a Very Lon

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agem

ent coal

45

AvivA

An

d Co

Al : a Very Lon

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ng

agem

ent coal

AvivA

’s broken

Appro

ACh

to

ClimA

te ChA

ng

e

Known for its bold statem

ents on climate change, Brit-

ish insurer Aviva is widely considered a clim

ate leader in the finance industry. T

he

mu

ltilin

e in

su

re

r h

as t

ak

-

en several meaningful steps, notably by enhancing

its climate-related fi

nancial disclosure and taking public positions against disastrous projects such as the Carm

ichael coal mine in A

ustralia. How

ever, w

hen it comes to coal, A

viva’s generally strong cli-m

ate policy is flaw

ed.

Burning coal is the top contributor to climate change. If

the goals of the Paris Agreement are to be m

et, no new

coal power plants can be built and existing plants m

ust be retired over the com

ing decades.

Aviva is n

o friend of

coal, but we kn

ow

that eng

agem

ent can be a m

ore pow

erful tool for chan

ge than sim

ply w

alking

away.

Ste

ve

Wa

yg

oo

d, C

hie

f R

esp

on

sib

le

Investment O

fficer, Aviva Investors

9

The Paris Agreement recognizes the crucial role of

“shifting the trillions” from fossil fuels to energy effi

-ciency and renew

able energies in addressing the cli-m

ate challenge. As part of this effort, at least 851 insti-

tutions, including major insurance com

panies such as Allianz, AXA, SCO

R and Zurich, have in recent years di-vested their assets from

coal and other fossil fuel com-

panies10. Aviva stands out w

ithin this trend, as the main

focus of its investment strategy is to engage w

ith coal com

panies rather than to divest from them

.

In July 2015, Aviva began engagem

ent with 40 com

-

panies which derive over 30%

of their revenue from

th

erm

al c

oa

l1

1. A

viv

a a

rg

ue

s t

ha

t r

ath

er t

ha

n “

just

div

estin

g”, it

ca

n u

se

its le

ve

ra

ge

as in

ve

sto

r t

o in

-

fluence these com

panies. The insurer states that it is also prepared to divest if a coal com

pany does not dem

onstrate sufficient progress

12.

Combining both engagem

ent and divestment m

akes sense, as the tw

o approaches can complem

ent and reinforce each other. H

owever, the follow

ing analysis raises serious questions regarding the eff

ectiveness of Aviva’s engagem

ent strategy.

In its 2017 climate-related disclosure

13, Aviva revealed that it had added PG

E and J-Power to an Investm

ent Stoplist, had divested from

these utilities and was also-

in the process of divesting £11 million from

an addition-

al 15 companies, including six from

China and two from

India

14. Aviva claims that disclosing the nam

es of com-

panies to be divested from w

ould be counterproductive for the engagem

ent process, but said that it would “dis-

close the names of the com

panies post divestment”.

Aviva claims to divest from

companies that still plan

to expand their coal generating capacity15. Yet in N

o-vem

ber 2017, Aviva held investments of $621 m

illion in shares and bonds of no less than 31 com

panies plan-ning new

coal plants. Six companies in w

hich Aviva con-tinued to invest planned to build m

ore new coal capaci-

ty than J-Power, one of the utilities Aviva divested from

. As the follow

ing sections demonstrate, other com

pa-nies in w

hich Aviva continues to invest score very low

on ESG criteria, for exam

ple by planning new coal proj-

ects adjacent to World H

eritage Sites.

In 2017, Aviva still held $22 m

illion of investments

in China’s Huaneng G

roup and $26 million in India’s

National Therm

al Power Corporation investees are

NTPC. Both plan to build new

coal plants totalling m

ore capacity than the entire UK coal fl

eet. NTPC

plans to build 38 GW

of new coal pow

er, making it the

world’s biggest coal plant developer. N

TPC is devel-oping the 1.3 G

W Ram

pal coal plant, threatening the Sunderbans in southern Bangladesh, the w

orld’s larg-est m

angrove forest, which supports the livelihood of

500,000 people and is a UN

ESCO W

orld Heritage Site.

As m

entioned Aviva is currently divesting £11 m

illion ($15 m

illion) from 15 coal com

panies, including six unnam

ed Chinese and two unnam

ed Indian compa

-

nies. These figures suggest that A

viva is either not divesting from

NTPC and H

uaneng, two com

panies in w

hich it holds no less than $48 million, or is only di-

vesting a small part of its holding, possibly because it

manages other investm

ents in these coal companies for

third parties and doesn’t cover them by its divestm

ent decisions.

Continuing to finance coal and tar sands might be justi-

fied, provided that Aviva’s engagement produced clear

progress towards an exit from

these fuels. Yet so far Avi-va has not been able to produce m

eaningful successes through its engagem

ent strategy. In its climate-related

financial disclosure 201717, the insurer reported that five

of the 40 coal companies it engaged w

ith have comm

it-ted to Science Based Targets follow

ing their discussions. As ExxonM

obil’s 2018 Energy and Carbon Summ

ary show

s, such aspirational targets and reports can easi-ly turn into em

pty public relations exercises. At a time

when m

assive reductions in greenhouse gas emissions

are required, they are completely insuffi

cient.

If the process is selective, well-resourced, tim

e-bound and linked to consequences, engaging fossil fuel com

-panies can be a useful strategy to accelerate the tran-sition to a low

-carbon economy. H

owever, Aviva should

acknowledge the fact that w

ith its limited ESG

capacity it cannot eff

ectively engage with all the coal com

panies it is exposed to, or even w

ith the 40 companies it has se-

lected for engagement. O

ther large insurers such as AXA have adopted sector-w

ide divestment criteria w

hich led to the exclusion of hundreds of com

panies from their

investment universe.

In conclusion, Aviva should not abandon its engagement

approach, but should complem

ent it with a consequen-

tial divestment approach. Aviva should focus its engage-

ment on a sm

all number of com

panies, selected because of their real potential to transition aw

ay from coal and

tar sands within one year, in line w

ith the Paris Agree-m

ent. If companies still plan new

carbon-intensive proj-ects, Aviva should autom

atically divest from them

.

Next m

onth we

will be nam

ing

and

famin

g, an

d namin

g an

d sham

ing

. The

reason we are

shamin

g [th

e worst

performers] is that

we g

ave them

a num

ber of years and

they did

not take

any notice. Th

ere com

es a time w

hen

we sh

ould vote with

our feet. We w

ill be d

ivesting

from th

ose com

panies.

He

len

a M

orris

se

y, H

ea

d o

f P

erso

na

l

Inv

estin

g,L

eg

al a

nd

Ge

ne

ra

l Inv

estm

en

t

Ma

na

ge

me

nt

16

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

67

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

Fu

rth

er

inv

estm

en

ts

in

th

ese

co

mp

an

ies

are

a

n

entry ticket to a 4°C world. Yet, in 2017 A

viva was

found to have invested $621 million in 31 of them

for its ow

n account and for third parties, $528 mil-

lion in shares and $93 million in bonds

24. T

his

ma

ke

s

Aviva the w

orld’s 54th biggest investor in the most

ag

gre

ssiv

e c

oa

l pla

nt d

ev

elo

pe

rs

25.

In 2017, 11 companies, w

hich attracted 97% of Avi-

va’s investments in the top coal plant developers, still

planned more than 90 G

W of new

coal capacity, six tim

es the British coal fleet. The five coal plant devel-opers in w

hich Aviva invested the most are all Europe-

an, in particular Polish. Together, they attracted $444 m

illion or 70% of Aviva’s total investm

ents in coal plant developers. Aviva figures am

ong the four biggest in-vestors in PG

E, Enea, Energa and Tauron, four Polish com

panies planning 8,245 MW

of new coal capacity.

In addition, Aviva holds smaller investm

ents in five oth-er Polish coal com

panies, for example ZEPAK, a com

pa-ny w

hich plans to create new open-pit m

ines holding m

ore than 1 billion tonnes of lignite, the dirtiest form

of coal 26. Three Aviva asset managers are estim

ated to hold at least €513 m

illion of shares and bonds in nine Polish coal com

panies in their portfolio, for Aviva’s own

account and for third parties.

The strong holdings in Polish coal developers indicate that Aviva’s investm

ent decisions play an important

role in supporting or blocking the European coal phase-out, w

ith imm

ense implications for clim

ate change and public health.

deepen

ing

the w

orld

’s CoA

l Ad

diCtio

n

The UN

recently called for a halt to new coal pow

er plants and an accelerated phase-out of existing plants as im

portant steps to achieving international climate

goals18. According to Clim

ate Analytics, OECD

countries m

ust exit the coal sector by 2030, while other coun-

tries need to phase out their coal fleets by 205019. This

requires the world to retire a m

inimum

of 100 GW

of coal pow

er capacity every year if the goals of the Paris Agreem

ent are to be met 20.

While a grow

ing number of countries and subnational

entities have comm

itted to phasing out coal plants and

have placed a moratorium

on new coal plants that lack

carbon capture and storage, over 630 GW

of new coal

capacity currently remain in planning or under con-

struction21.

In 2017, 120 companies w

ere planning to build over 550 G

W of new

coal plant capacity – equal to the com

bined coal fleets of India, the U

nited States and G

ermany

22. These com

panies are the world’s m

ost aggressive coal plant developers and should be at the top of every divestm

ent list.

Coal is th

e most

polluting

industry

and

the m

ost d

amag

ing

for world

temperature…

for us it is critical to stop prod

uction of new

coal capacity.Jad Ariss, AXA’s head of public aff

airs and co

rp

ora

te

re

sp

on

sib

ility

23

Com

pAn

yh

eAd

-qu

Arters

Cou

ntries o

f ex

pAn

sion

CoA

l shA

re of

pow

er pro

du

Ction

CoA

l pow

er ex

pAn

sion

plA

ns

27

totA

l in

vestmen

ts

PGE

PolandPoland

> 95%5,260 M

W198

Tauron Poland

Poland> 90%

910 MW

78

EneaPoland

Poland94%

1575 MW

28

59

CEZCzech Republic

Czech Republic47%

1410 MW

55

EnergaPoland

Poland57%

500 MW

54

KEPCOSouth Korea

South Korea, Botswana,

Indonesia, Philippines, Sw

aziland, Vietnam,

South Africa

39%10,795 M

W43

AES CorporationU

SAIndia, Philippines

34%818 M

W27

NTPC

IndiaIndia, Bangladesh

94%38,372 M

W26

China Huaneng

Group

ChinaChina, Pakistan

71%20,750 M

W22

Aboitiz Power

CorporationPhilippines

Philippines52%

1344 MW

22

PLN Persero

IndonesiaIndonesia

68%10,880M

W21

To

ta

l92,614 M

W6

05

Coal p

lant d

evelopers in

wh

ich A

viva held

more th

an U

S $20 million

investmen

ts in b

ond

s and

shares at th

e most recen

t filin

g d

ate (research

from N

ovemb

er 2017)

© T

orste

n K

elle

rm

an

n

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

89

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

In February 2018, a briefing paper by the U

nfriend Coal cam

paign discovered that Aviva held €422 m

il-lion of investm

ents in nine Polish coal companies

through its local pension fund (OFE)

32.

Th

is m

ak

es

Aviva the second biggest insurance investor in Pol-

ish coal companies through its O

FE. The Polish NG

O

Foundation “Developm

ent YES - Open-Pit M

ines NO

” and ShareAction asked Aviva to divest from

these com-

panies at its 2017 annual general meeting.

In response to the Unfriend Coal briefing, Aviva stated

that it was “no friend of coal” but favoured engagem

ent over divestm

ent. The insurer also referred to a legal ob-ligation w

hich, it claimed, requires local pension provid-

ers in Poland to invest 70% of their pension custom

ers’ assets in “stocks on the W

arsaw Stock Exchange

33”. In other w

ords, Aviva claimed to have no choice but to in-

vest in Polish coal companies.

In fact, article 141 of Poland’s Act Concerning the Or-

ganisation and Functions of the Retirement Funds

34 re-quires Aviva and other pension funds to invest at least 70%

of the OFE’s assets in assets denom

inated in Pol-ish currency. This requirem

ent does not however de-

termine the level of investm

ent in companies listed on

the Warsaw

Stock Exchange, even less in coal compa-

nies. As an example indicating this flexibility,

th

e P

ol-

ish pension fund of Allianz has invested 1.94%

of its p

en

sio

n c

usto

me

rs’ a

sse

ts in

Po

lish

co

al c

om

pa

nie

s

compared w

ith 4.42% for A

viva.

The value of Polish coal companies shares in Aviva’s

Polish pension fund portfolio amounted to €310 m

illion at the end of 2015, €319 m

illion at the end of 2016, and €422 m

illion at the end of 2017. The 2017 increase of A

viv

a’s

in

ve

stm

en

ts in

to

P

olis

h co

al

co

mp

an

ies is

due to a raising share value of several companies,

but also to purchases of new shares in Energa, JSW

and Fam

ur. All of this indicates that investors are

flexible in how

to implem

ent the pension funds law,

while unlike other insurers, A

viva isn’t making use

of this flexibility.

Finally, Aviva has a second asset manager based in Po-

land called Aviva Investors Poland SA, which does not

fall under the legal obligation to invest in companies

listed on the Warsaw

Stock Exchange. Aviva Investors Poland SA w

ere found to hold €91 million of assets in

PGE, Enea, Energa and Tauron at the m

ost recent filing date in N

ovember 2017.

FOR

CED

TO IN

VEST IN

PO

LISH C

OA

L ?

©B

elc

ha

to

w k

op

aln

ia

Poland’s PGE is Europe’s second biggest CO

2 emitter and

plans to build 5,260 MW

of new coal pow

er capacity, making

it the largest coal power developer in Europe

29.

PGE is currently building tw

o 900 MW

hard coal units at its Opole

power plant and adding 460 M

W of capacity to its lignite pow

er plant at Turów

. PGE also plans to expand its Turów

mine and

constructs huge new greenfield m

ines. PGE also recently final-

ised the acquisition of the Rybnik hard coal power plant from

French utility ED

F. Coal comprises m

ore than 90% of PG

E’s power

capacity. In 2017, PGE invested €127 into conventional energy for

every Euro invested in renewable energies.

Based on the 2013 emissions of all EU

coal power plants,

PGE’s coal fl

eet is the dirtiest in Europe, causing the most

pre

ma

tu

re

de

ath

s d

ue

to

air

po

llutio

n. P

olis

h c

oa

l pla

nts a

re

estim

ate

d t

o c

au

se

5,8

30

pre

ma

tu

re

de

ath

s a

ye

ar, including

1,140 in Poland, 110 in the UK and 4,580 in other countries

30. PG

E operates two of the continent’s m

ost polluting coal plants: Belchatów

and Turów. Belchatów

alone is estimated to cause al-

most 1,300 prem

ature deaths each year.

Aviva held PG

E shares worth $198 m

illion at the last filing

date in Novem

ber 2017, which m

ade it the second biggest investor in the com

pany. A briefi

ng paper by the Unfriend

Coal campaign found that A

viva holds €122 million in PG

E through its Polish pension fund (O

FE).

In its latest climate-related financial disclosure, Aviva stated that

it had added PGE to its Investm

ent Stoplist and had divested its “active beneficial holdings w

herever possible”. Aviva added that, “due to regulatory restrictions around pension provision in Po-land in respect of the investm

ent strategy and independent gov-ernance arrangem

ents, we are not able to influence the expo-

sure of portfolios to companies w

e have chosen to divest from

elsewhere

31 ”. This means that the bulk of A

viva’s investment

in PGE m

ight not be affected by its decision to put PG

E on a Stoplist and divest from

the company. A

viva will certainly

maintain its investm

ent in the company through its O

FE and m

igh

t h

old

on

to

its in

ve

stm

en

ts t

hro

ug

h o

th

er c

ha

nn

els

as

well.

pge, th

e dirty d

Arlin

g o

f the po

lish

CoA

l seCtor

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

1011

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

investin

g in

tAr sA

nd

s An

d

ind

igen

ou

s righ

ts violA

tion

s

Phasing out coal will not be enough to keep global w

arm-

ing well below

2°C. Tar sands should also be phased out quickly, as they are one of the m

ost carbon-intensive, environm

entally destructive and financially risky fossil fuel sectors. N

evertheless, the tar sands industry still has plans for new

projects which w

ould increase production to over 70%

by 204035.

In 2017, Aviva held m

ore than $634 million of in

-

ve

stm

en

ts

in

co

rp

ora

tio

ns

op

era

tin

g

in

Ca

na

dia

n

tar sands or planning to build major tar sands pipe

-

line

s3

6. For example, A

viva held close to $7 million in

inv

estm

en

ts in

th

e C

an

ad

ian

m

inin

g co

mp

an

y T

eck

Resources, which is currently planning a huge new

open-pit tar sands m

ine producing 260,000 barrels of bitum

en per day.

New

and expanded projects continue to be proposed on the recognised traditional territories of Indige

-

nous peoples in spite of their clear, stated opposi-tio

n. The Frontier Project, w

hich has been proposed by Teck Resources, is located in the traditional territory of the Athabasca Chipew

yan First Nation. The Indigenous

comm

unity is already experiencing high cancer rates linked to industrial pollution. They have rejected the project because it w

ould devastate forests and muskeg

areas crucial for wild bison, threaten traditional hunting

and fishing practices and pose severe risks of water and

air contamination

37.

In Novem

ber 2017, In

dig

en

ou

s C

lima

te

A

ctio

n (IC

A)

won the CD

N$150,000 A

viva Canada Comm

unity Leg-

acy Aw

ard through the Aviva Com

munity Fund com

-

petition. In a stark demonstration of protest, ICA

decided to turn dow

n the award, “because of a direct

contradiction between Aviva’s financial relationship w

ith oil and gas projects and ICA’s vision, m

ission, and values”. The organization’s Executive D

irector Eriel Deranger stat-

ed: “Our organization is w

orking to support Indigenous rights and address the clim

ate crisis while Aviva is in-

vesting in corporations proposing or operating tar sands projects that threaten w

ater, land, the climate and Indig-

enous rights. 38 ”

We cann

ot in g

ood conscien

ce accept an aw

ard from

a corporation that is fi

nancially

associated w

ith fossil fuel en

ergy

projects that violate th

e rights of

Indig

enous peoples

and

contribute to g

lobal climate

chang

e.E

rie

l De

ra

ng

er, In

dig

en

ou

s C

lima

te

Actio

n’s

Ex

ecu

tiv

e D

ire

cto

r

©p

ric

eo

fo

il.org

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

1213

AvivA

An

d Co

Al : a Very Lon

g E

ng

agem

ent coal

Con

Clusio

n

In Decem

ber 2018, delegates from nearly 200 countries

will m

eet in Katowice, Poland, to agree on next steps to

implem

ent the Paris Agreement. The U

N’s CO

P24 con-ference w

ill focus global attention on the role played by Polish com

panies, including their investors and finan-ciers, in underm

ining the transition from coal to clean

energy sources.

In May 2018, the Paris city council passed a m

otion calling on the international insurers “to com

mit to op-

posing air pollution and to withdraw

their support from

projects and companies in the coal sector, notably in

the European Union and m

ore particularly in Poland.” 39

Aviva should take imm

ediate action to demonstrate that

it is serious about its comm

itments to the goals of the

Paris Agreement. It should divest from

the companies

that years after the adoption of the Paris Agreement

continue to develop new coal and tar sands projects,

and in so doing, avoid facing escalating pressure from

grassroots movem

ents and civil society organizations.

Aviva should focus its engagement on a sm

all number

of companies w

hich have promising potential to adopt

a strategy to transition away from

coal and tar sands w

ithin one year, in line with the goals of the Paris Agree-

ment. The insurer should divest from

other companies,

starting with those w

hich plan investments in new

coal or tar sands infrastructure, or have significant exposure to the coal and tar sands sector. D

ivestment should

cover both the insurer’s own assets and assets m

an-aged on behalf of third parties.

This briefing is part of the Unfriend Coal cam

paign w

hich holds insurers to account for their action and in-action on clim

ate change.

sou

rCes An

d Cred

itsd

irty business: Aviva and Coal: a Very Long Engagement

published by 350.org, Association Workshop for All Beings, EcoU

nia, Foundation “Developm

ent YES - Open-Pit

Mines N

O”, The Sunrise Project

Author: Lucie Pinson

design: Edouard M

archal - edwarden.fr

All im

ages : Pixabay ; Belchatow kopalnia ; Torsten Kellerm

ann ; Priceofoil ; Getty Im

age

May 2018

This briefing paper and further materials on coal insurance and investm

ent are available at ww

w.unfriendcoal.

com. For any additional inform

ation or feedback, contact European Unfriend Coal coordinator Lucie Pinson at:

lucie@sunriseproject.org.au

©G

etty

Ima

ge

Con

Clusio

n

1 - A

viv

a’s

stra

te

gic

re

sp

on

se

to

clim

ate

ch

an

ge, 2016 update, p. 14.

2 - U

NEP, The Em

issions Gap Report, O

ctober 2017.3

- Reuters, M

arch 22, 2018, “New

coal plants falling but not enough to m

ee

t P

aris

ta

rg

et: s

tu

dy”, view

ed on April 19, 2018.

4 - Oil Change International, Septem

ber 2016, “The Sky’s Limit”, p. 5.

5 - The Independent, A

pril 10, 2018, “H

urric

an

es H

arv

ey

, Irm

a a

nd

Ma

ria

pu

sh

ed

n

atu

ra

l c

ata

stro

ph

e in

su

ra

nc

e to

re

co

rd

h

igh

la

st y

ea

r,

stu

dy

shows”, view

ed on April 19, 2018.

6 - See gofossilfree.org/divestm

ent/comm

itments, view

ed on April 19, 2018

and Unfriend Coal, N

ovember 2017, In

su

rin

g C

oa

l No

Mo

re

: An

Insu

ra

nc

e

Scorecard on Coal and Climate Change.

7 - Aviva’s clim

ate-related financial disclosure 2017, p.4 and according to

information given to the author by Aviva.

8 - H

elena Morrissey quoted in The Telegraph, “H

it climate target or w

e w

ill ditch your shares: LGIM

’s threat to dirty companies”, view

ed on April

23, 2018.9 - Aviva, M

edium, February 9, 2018, “W

e are no friend of coal”, viewed on

April 19, 2018.

10

- See gofossilfree.org/divestment/com

mitm

ents, viewed on A

pril 19, 2018 and U

nfriend Coal, Novem

ber 2017, Insu

rin

g C

oa

l No

Mo

re

: An

Insu

ra

nc

e

Scorecard on Coal and Climate Change.

11

- Av

iva

’s s

tra

te

gic

re

sp

on

se

to

clim

ate

ch

an

ge, July 2015, p. 11.

12

- Aviva, Medium

, February 9, 2019, “We are no friend of coal”, view

ed on A

pril 19th, 2018.1

3- A

viva’s climate-related fi

nancial disclosure 2017, p.4. 14 - According to inform

ation given to the author by Aviva.1

5 - A

viva’s climate-related fi

nancial disclosure 2017, p.4. 1

6 - H

elena Morrissey quoted in The Telegraph, “H

it climate target or w

e w

ill ditch your shares: LGIM

’s threat to dirty companies”, view

ed on April

23, 2018.17 - A

viva’s climate-related fi

nancial disclosure 2017, p.4. 1

8 - U

NEP, The Em

issions Gap Report, 2017.

19 - See Clim

ate

An

aly

tic

s, viewed on A

pril 19, 2018.2

0 - Reuters, M

arch 22, 2018, “New

coal plants falling but not enough to m

ee

t P

aris

ta

rg

et: s

tu

dy”, view

ed on April 19, 2018.

21

- CoalSwarm

, Sierra Club, Greenpeace, B

oo

m a

nd

Bu

st 2

01

8, p. 7. 2

2- See coalexit.org, view

ed on April 18, 2018.

23

- The Financial Times, January 8, 2018, “

Insu

re

rs g

o c

old

on

co

al in

du

s-

try”, view

ed on April 19th, 2018.

24 - Financial data for this briefing was com

piled by the research consultan-cy Profundo. Profundo w

as mandated to identify the institutional bond-and

shareholders of the 2017 120 top coal plant developers as identified by urge-w

ald in the Coal Plant Developers list - see coalexit.org. Profundo used fi-

nancial databases such as Thomson EIKO

N and B

loomberg. Available data is

generally far from com

plete and it is therefore likely that Aviva’s investments

in the bonds and shares of coal plant developers are in fact significantly high-er than the$ 621 m

illion that was identified.

25

- For comparison, A

XA, w

hich manages 1.6 tim

es more assets than Aviva,

is ranked 32th with holdings of $894 m

illion in these companies, 1.4 tim

es bigger than Aviva’s. At the end of 2017 A

XA divested from these holdings.

26

- Polish Geological Service, D

ecember 12, 2016, B

ilans zasobów złóż kopal-

in w Polsce. Stan na 31 2016, p.33/36.

27 - Coal power expansion plans include projects that are announced,

pre-permitted, perm

itted and under construction. As stated in the G

lobal Coal Exit List, the num

bers of Megaw

att planned are prorated, calculated according to the com

pany’s ownership of the project or the num

ber of com-

panies involved. 2

8 - The 1075 hard-coal unit at Kozienice TPP has been operational since D

e-cem

ber 2017.29 - See coalexit.org, view

ed on April 19, 2018.

30

- W

WF European O

ffice, C

AN

Europe, Sandbag, HEA

L in Brussels, June

2016, Europe’s Dark Cloud.

31

- Aviva’s clim

ate-related financial disclosure 2017, p.4.

32

- Unfriend Coal, D

irty Bu

siness, February 2018, p. 6. 3

3 - Aviva, M

edium, February 9, 2019, “W

e are no friend of coal”, viewed on

April 19th, 2018.

34 - Ustaw

a o organizacji i funkcjonowaniu funduszy em

erytalnych from

28 August 1997. ww

w.m

f.gov.pl/ko/ministry-of-fi

nance/financial-m

ar-

ket-in-poland/pension

-funds.3

5 - Claudia C

attaneo, Financial Post, September 28, 2017 “A

lberta’s Patch: Solving the W

orld’s B

ig Environmental Challenges or a Sunset Indu

s-

try

?”, viewed on A

pril 19, 2018.3

6 - According to Aviva PLC

’s most recent 13-F fi

ling to the Securities and Exchange Com

mission

.37 - Rainforest Action N

etwork, N

ovember 2017, Funding Tar Sands.

38

- Indigenous Clim

ate Action, Decem

ber 6, 2017, “In

dig

en

ou

s C

lima

te

Action rejects $150,000 aw

ard from A

viva Canada due to moral con

flict

with A

viva investments”, view

ed on April 19, 2018.

39 - G

roupe Ecologiste de Paris, May 2, 2018, Vœ

u relatif à la responsabilité d

u s

ec

te

ur d

e l’a

ssu

ra

nc

e d

an

s la

po

llutio

n d

e l’a

ir, viewed on M

ay 3, 2018.

MAY 2018

© pixabay.com

AvivA And CoAl A very long engAgement