Insuring Tomorrow: Aviva’s Leading Climate Action

The private sector has a critical role to play in tackling the climate crisis, a fact Aviva - the UK’s leading diversified insurance company – has taken seriously, seeing them take huge strides on an ambitious, award-winning pathway to net zero. Leading their climate strategy over the past 27 years has been Zelda Bentham, Aviva’s Group Head of Sustainability, who joined our Director of Product Development, Rob Stevens, for a fireside chat about the incredible climate achievements she has spearheaded at the organization.

Read below to find out more about why climate change and the insurance sector are so interconnected, how Aviva kickstarted its climate action, and the role of high-quality carbon credits in their climate strategy. You can also watch a playback of Rob and Zelda’s full conversation here.

Why should the insurance industry engage in climate action?

As experts in risk, the insurance sector has a unique position in the climate crisis, understanding the existential threat it poses. “We have two sides to our business, the general insurance side, and the pension side. Both of which are impacted by climate change,” explains Zelda. “As an insurance company, we understand risks, so we take the science of climate change and try and translate that into what it means for companies and individuals in terms of the need for cover.”

In the last year, extreme weather conditions hit every corner of the globe – soaring temperatures, droughts, floods, wildfires. As these events and risks become more unpredictable and widespread, they become more challenging or expensive to insure against. “Flooding in the UK, the wildfires in Canada, are an increasing issue for us an insurance company and for our customers,” says Zelda.

“Also, as a pension provider we are investing our customers’ money with companies around the world. These organizations are creating carbon and contributing to climate change. We need to make sure that when we make these long-term investments for our customers, they can retire into a liveable world.”

If the industry engages proactively in climate action, not only will they help safeguard our businesses but also contribute to the broader societal effort towards a sustainable and resilient future.

Why is Aviva taking climate action?

Aviva has taken a leading climate action role in the insurance industry since 2006, highlighting the pivotal role insurance companies can play in reducing emissions and supporting communities and businesses in mitigating the effects of climate change. It is the first major insurer worldwide to aim for net zero carbon by 2040.

“We realized that we needed to take a stance on climate change,” says Zelda. “In 2006 we nailed our colors to the mast with a signed statement from the board stating our position and our intentions.” In the same year they became the first global insurance company to go carbon neutral for its operations.

“We have been around for over 320 years, if we want to be around going forwards, we have to take action. The reality is, if we reach a global temperature rise of four degrees that basically wipes out our business model. We can price risks all the time but if those risks happen frequently, this pushes the price up to an unaffordable point for customers. A four-degree world is not good for us, it’s not good for our customers, it’s not good for anybody and that’s why we’re trying to address it so much.”

What were Aviva’s first steps on its climate action journey?

Zelda’s unequivocal advice to any companies starting out with their climate strategies is to “just get going.” Explaining that Aviva’s starting point, as it is for many, was to look at operational emissions and how they can be reduced. “We started off with renewable energy. At that point we could only purchase 19% of our electricity from renewable sources, but we just wanted to get going. This grew until we got to 100% renewable electricity in the UK business. The point is we had to take that first step.”

“We set an emissions baseline for 2010, with an original goal of 20% reduction by 2020. We exceeded this target, reducing our emissions by 83% by 2020.” In 2021 they set new ambitious targets to:

• Become a net zero company by 2040
• Achieve 60% reduction in carbon intensity of assets by 2030
• Have net zero operations and supply chain

What has been key to Aviva’s success so far?

“Board buy-in. If the board don’t get it and the executive don’t get it, that’s when you struggle to make progress. We’ve been really lucky that our board is so bought-in, they know the strong link between our business and climate change.”

Understanding that board-buy in can be a big barrier for some companies Zelda suggests considering what it is that will make them sit up and listen, “Increasingly you can put it in terms of financial risk, whether it’s to your supply chain because climate impact means you can’t produce goods and services, or whether it’s because you can’t get your employees to work because of the extreme weather. There’s lots of different levers that you can pull on that will resonate with different board members and areas of the executive.”

“Behavior change has also been critical to our success and our people are all really engaged with this. This makes it easier to implement solutions.”

What role has the voluntary carbon market played in your strategy?

Since becoming the first global insurance company to go carbon neutral for its operations in 2006, Aviva has saved more than 1.3 million tonnes of CO₂ through carbon offsetting projects, improving 1.1 million lives in the process. This has supported their impressive decarbonization journey, showing how the two can work hand in hand. As Zelda explains, “the reduction must happen first. You need a plan for what you’re going to do within the business to reduce as much as you can, but emissions will not disappear overnight. We decided to offset our residual emissions each year whilst driving down the reduction in the company.”

“The projects we have supported through Climate Impact Partners do much more than avoiding carbon and it’s the wider co-benefits that helped the board sign off on our carbon credit strategy. Beyond a financial transaction for tonnes of carbon, they saw what the projects could deliver to communities – health benefits, livelihood benefits.”

“We wanted to measure this social impact and set Climate Impact Partners the task of finding a way to do this.” By collaborating with the London Benchmarking Group (now B4SI) Climate Impact Partners provided the company with a pioneering new way to measure the social impact of its carbon offsetting projects.

This tool allowed Aviva to demonstrate that its carbon neutral program has so far benefitted 1.1 million people and is a cost-effective way to make a positive difference to communities and climate change. “This meant we could understand the impact of clean cookstove and clean water projects on indoor air pollution, time savings - enabling access to education or jobs, money saved, less water borne diseases -, reducing the burden on hospitals and medical treatments.”

With Climate Impact Partners support, Aviva won a UNFCCC Momentum for Change award, recognizing its combined climate neutrality and social impact approach as best practice and an inspiration for others – and helping to position it as a responsible, ethical brand.

Looking to the future, what are the next challenges?

As for many organizations, Scope 3 is on Aviva’s agenda and their message is clear – “companies need to get going on Scope 3 now.”

“Scope 3 for us is all about engagement. It is about the companies in our supply chain that we invest in, ensuring they have sustainable value in the long term and for our customers on the insurance side it’s about reducing the climate risk. It’s about how we can support companies to state their ambitions and start to take action. As our CFO said, if we wait until the data on Scope 3 is perfect it will be too late to do anything. Everyone knows what the right steps are so do something now.”

What keeps you motivated?

“Urgent optimism.”

“You see the news and it can be scary, to a point that it’s paralyzing, and you don’t know what to do. But I believe that doing the right thing, transitioning to a low carbon economy, moving business to a more sustainable footing has more value than not doing anything. And its urgent optimist because we know the planet is changing far too quickly and we may not be able to sort it out as quickly as we need to, but we need to do something. We can’t just delay. There’s so much that we can do, and we can do this together as a whole economy. We just need everyone to play their part and we can make positive changes.”