Major UK investor says it will vote against company directors if they fail on climate

One of the UK’s leading asset managers has said it wants to see "concrete action" from companies on environmental pledges, or it will vote to have directors removed, as the organisation targets firms’ long term impacts on the world.

In a letter to around 1,500 companies, Aviva Investments said it wanted to see "tangible and transparent progress on a wider definition of sustainability", with key measures being human rights, biodiversity and climate impacts.

In the letter, Mark Versey, the chief executive of the £262bn asset manager, said he hoped the focus would result in a "better future for society".

He said: “We want to encourage companies to consider the whole picture of sustainability because this is how they will create the greatest return for shareholders, while helping to build a better future for society.

"Companies must now turn their pledges into concrete and measurable plans of delivery. Our letter sets out clear expectations as to how they should do this, and what those plans must address across climate impact, biodiversity and human rights."

In a statement that described interactions with companies as "engagement with teeth", the organisation highlighted how they will expect companies to develop more coherent and holistic climate and environment strategies.

“Simply cutting emissions but allowing the destruction of the rainforest to continue will do little to reverse global warming," Mr Versey said.

"Companies need to adopt an integrated approach for maximum benefit,” he added, outlining how as well as environmental improvements, Aviva Investors will also expect companies to support "a just social transition for workers, customers and communities".

The letter specifically mentions "the Sixth Great Extinction", which scientists have said is now underway on our planet, and which has been caused due to human activity.

"This is of serious concern as ecosystem services provided by the natural world underpin our economies and societies and will increasingly become an important driver of company valuations. More than half of global GDP – around $44 trillion - is reliant on biodiversity and our ecosystems," the letter says.

As such, Aviva Investors said it "expects all companies to develop biodiversity action plans".

Campaigners said governments around the world should already have legal mechanisms in place to protect the natural world, so the onus to trade responsibly is not only a voluntary effort or a response to profit warnings.

Friends of the Earth’s head of policy, Mike Childs told The Independent: “Investment companies should be using their power and influence to encourage the wider business world to take the climate and ecological crises seriously.

“For too many years investors have failed to heed dire scientific warnings and continued to pump billions of pounds into enterprises that damage our planet and cause huge social harm.

"But not every company is willing to take the necessary steps to reduce their impact, which is why investment firms also need to divest from climate-wrecking fossil fuel businesses, rather than continuing to bankroll them.

“Safeguarding our future mustn’t be a voluntary option. Governments also have an important role to ensure that business put environmental and social sustainability at the core of all their operations.”

Charlie Kronick, senior climate campaigner at Greenpeace UK, told The Independent: "Investors are finally waking up to the reality that the climate crisis is going to be catastrophic to their bottom lines.

"But it’s no longer enough to finally acknowledge that climate change is a threat to the financial system. It’s time to recognise that powerful financial actors like Blackrock [the world’s biggest investor] are driving the crisis by funding and investing in fossil fuels and deforestation.

"We’re past the moment where it’s possible to end the climate emergency one bank or investor at a time - it’s now essential that Rishi Sunak and the Treasury step up to require  all UK regulated financial institutions to adopt and implement a transition plan that aligns with the 1.5C goal of the Paris Agreement."