The financial services giants are focusing on an engagement-led, “whole economy” approach to reducing carbon emissions.
Two of the UK’s biggest pension providers and investors have restated their commitment to responsible investment and stewardship in the face of criticism from a leading campaign group.
Aviva and Legal & General (L&G) have been targeted by Make My Money Matter, which campaigns for responsible investing practices in UK pensions.
The campaign group called for the two firms – which between them are responsible for approximately £1.4trn in assets – to step up their stewardship of the fossil fuel industry and show stronger leadership in the climate emergency.
Make My Money Matter stated that, despite Aviva and Legal & General having set ambitious climate-related targets, they had both voted in line with the management of major oil companies Shell and BP on almost all resolutions at their 2024 annual shareholder meetings.
Aviva and L&G both voted against Shell’s Energy Transition Strategy, citing a failure to align to global net zero targets.
However, Make My Money Matter argued that the two companies’ subsequent votes in support of other regular items – including the re-appointment of board chairs, directors and CEOs, as well as approving remuneration and annual reports, represented “weak stewardship.”
Tony Burdon, chief executive officer at Make My Money Matter, said: “Given the climate leadership Aviva and Legal & General have shown in recent years, we were shocked to see their almost complete support for Shell and BP at this year’s AGMs.
“In a climate and nature emergency, voting in support of fossil fuel companies that are not seriously transitioning to 1.5°C puts the pensions and retirement of millions of UK savers at risk, and the world they retire into. We call on the UK pensions industry to vote against the chairs, directors, remuneration, auditors and plans of these companies.”
A ‘whole economy’ approach
In response, an L&G spokesperson said: “As a large, global asset manager and owner we take our role as a responsible investor on behalf of our clients seriously, and engage on their behalf to raise corporate standards, provide governance, and promote best practice.
“Climate change is a critical issue of global concern and we are committed to engaging constructively with companies to aid the transition to a low carbon and net zero economy.”
An Aviva spokesperson said Aviva Investors “wholeheartedly” agreed with the importance of decarbonising the global economy. They said the company was committed to addressing climate change including through its stewardship activities, engaging with companies to bring about change.
The spokesperson added: “We take our responsibility to be part of the process for change seriously. The oil and gas sector [is] critical to the economy as a source of energy, while the users of energy seek to transition away from fossil fuels.
“We have found that a whole-economy approach, balancing both the demand for energy and the supply of energy can provide superior outcomes for our customers’ financial returns as well as delivering a sustainable outcome.
“Our stewardship approach and voting decisions take account of the overall economy and put customer outcomes at the heart of our decision making.”
The Make My Money Matter campaign has been praised by Karen Shackleton, chair and founder of Pensions for Purpose. Shackleton told Pensions Expert: “This campaign is a positive force and the concerns raised by Make My Money Matter highlight the challenging balance pension providers must strike in their stewardship roles.
“It also underscores the need for the pensions industry to reassess its stewardship approach, where thousands of investors make separate, often conflicting requests to firms.
“By enhancing engagement through structured plans and greater collaboration with peers, setting clear escalation policies and ensuring consistent communication, the industry can more effectively protect both the financial and environmental interests of pensions savers and ensure responsible stewardship."
Further reading
Fiduciary duty change could boost climate goals, say trustees (6 June 2024)
Clarity on fiduciary duty and sustainability (12 February 2024)
How schemes are holding companies to account on climate change (13 January 2024)
