Leading British asset management, Aviva Investors, intends to lobby boards of directors for further action on biodiversity and human rights to ensure that corporations reflect "the complete picture of sustainability."
Along with climate change, which is a primary worry for most investors, Aviva's action underscores rising concern about the business world's influence on the environment and how social stakeholders, including workers, are treated throughout often extensive supply chains.
The asset management segment of Aviva insurance company, which manages 262 billion pounds ($354.62 billion) in assets, will now prioritize human rights and biodiversity alongside climate change and CEO compensation when making investment decisions.
The amount invested in ethical funds focusing on environmental, social, and governance (ESG) concerns have increased significantly. As a result, investors have effectively pushed businesses to improve these areas. CEO Mark Versey stated in his annual letter to 1,500 firms in 30 countries that executive pay should consider how successfully sustainability standards have been accomplished, warning that lagging boards will face accountability.
"Simply reducing emissions while continuing to destroy the rain forest would do little to halt global warming," Versey added. "For optimal benefit, businesses must take an integrated strategy."
"It is sometimes asserted that investor involvement with the 'S' component of ESG subjects lags behind an emphasis on the environment. Consequently, this inclusion is very much appreciated.
Concerning climate change, all businesses would be required to prepare a climate transition plan, "and those in higher-impact industries would be required to provide these to shareholders for approval," Versey added.
Companies should begin voluntary disclosures based on climate-related standards developed by the newly formed International Sustainability Standards Board, which was introduced last November at the COP26 global meeting.
"We recognize that the standard is not yet complete and would advocate for a phased approach to reporting, with full compliance expected by 2024," Versey added. He added that executive compensation plans should contain "strong, challenging, and externally verified sustainability goals" related to the company's commercial strategy.
Separately on Monday, the European arm of another investor BMO Global Asset Management, a subsidiary of Columbia Threadneedle, a unit of Ameriprise Financial, said it would press firms on human rights problems.
"Events over the last year, particularly the ongoing COVID-19 epidemic and extreme weather events, have emphasized the critical nature of building a more resilient future," Claudia Wearmouth, co-head of the Responsible Investment team at the business, stated.
"Climate change, biodiversity loss, and human rights are all important concerns."
Axa Investment Managers said in June that it was widening its palm oil investment strategy to exclude firms involved in significant land use disputes or those that contribute to biodiversity loss through soy, livestock, and forestry. @via Aviva Investors.