Aviva’s Scope 3 Ambitions
The insurer wants to fully decarbonise its supply chain by 2040, says Chief Sustainability Officer Claudine Blamey. This could be a challenging task.
In its first climate transition plan, published in 2022, British multinational insurance company Aviva said it wanted to abate its own carbon emissions and those of its suppliers by 2030.
Three years on and the insurer’s second transition plan, approved by the board on 26 February, has pushed the target for fully decarbonising its supply chain (Scope 3 emissions) back to 2040.
This shift doesn’t change Aviva’s overarching goal of being fully net zero by 2040, but it does underscore an important challenge that many climate-conscious companies face. While there are plenty of elements that they can control to drive forwards their decarbonisation agenda, they often find themselves at the mercy of external players – and the world is becoming an increasingly unforgiving place for those who want to talk about sustainability.
For instance, as an insurer, Aviva relies heavily on aluminium and steel for repairs that have to be made as part of certain insurance claims, and aviation fuel as part of travel insurance policies.
“None of these [components] have been developed in a way that is net zero – and certainly they are not going to be net zero by 2030,” said Claudine Blamey, Aviva’s Chief Sustainability Officer.
“While we can play our role, and keep pushing for the right policies, we need these supply chains to decarbonise as well. This has been a big lesson learned. We had to deep dive into our supply chains and understand where the biggest carbon emissions are, so that we could set our targets.”
The road to net zero
Aviva has set itself aggressive targets for reaching net zero. Since 2019, the company has reduced its Scope 1 and 2 carbon emissions by 51%, and says that it is on track to deliver a 90% reduction (from the 2019 baseline) by 2030. Aviva also wants to see, by the end of the year, 70% of its expenditure go to suppliers with decarbonisation targets validated by the Science Based Targets initiative (SBTi). This level currently stands at 51%.
“We are on track to deliver the 90% reduction by 2030. We have a very robust plan in place, and we have the funding behind it, so we know we will get there,” said Blamey.
Proposed improvements include making the buildings and vehicles that Aviva owns more energy efficient, and reviewing staff travel policies. Such fixes are not so readily available in the wider world.
“In terms of the supply chain we can’t move faster than what’s going on,” said Blamey.
But there are a few ways in which Aviva can nudge things in the right direction.
The firm regularly hosts seminars for suppliers, outlining what is expected from them and what support they can expect to receive. Aviva also provides written guidance for those companies that it deals with.
While the insurance firm has seen a good amount of traction from this engagement, what may be making even more of a difference is the net zero targets that it imposes on larger suppliers.
“We’ve made validated net zero targets a condition of doing business with us. For example, new and existing suppliers for contracts that exceed £750,000 (US$988,000) in the UK must have SBTi targets in place, or an approved equivalent. If they don’t, they will need to be approved by our procurement director on a case-by-case basis,” said Blamey.
Aviva also actively engages with climate-focused industry bodies, such as the Net Zero Asset Owner Alliance. Aviva’s CEO, Amanda Blanc, was Co-chair of the UK Transition Plan Taskforce, from its launch in April 2022 until the conclusion of its work in October 2024.
“I think we punch above our weight because of the ambition that we set to start with,” said Blamey. “We’ve been working on sustainability for many years and have built a reputation in this space. This reputation serves us well and means that people listen to us.”
Blamey preferred to sidestep questions relating to whether the landscape in which Aviva now operates has become tougher than it was three years ago, in terms of reaching sustainability targets.
“We’ll have to wait to see whether we are going to hit the 70% target for sure, but we are going to go at it as best we can,” she said.
“If we don’t quite achieve this, then we need to be able to explain why. Our roadmap is all about transparency. We know what the challenges are, we will put a plan in place to tackle those challenges, and we will be transparent to stakeholders about how we are doing that.”
No net zero without nature
A new component of Aviva’s transition plan, compared to the one it published three years ago, is nature.
“There is no net zero without nature,” said Aviva in its transition plan. “Human activity in agriculture, forestry, and other land use alone contributes around one-quarter of global emissions. In addition, nature-based solutions could contribute to over one-third of the cost-effective climate mitigation needed between now and 2030 to stabilise warming to below 2°C.”
Key activities that Aviva plans to take in this area includes a group-wide assessment of nature risk and opportunity, boosting internal education and training and embedding nature into planning, governance, and risk appetite considerations.
“We have been doing lots around nature for many years. For example, we have partnered with wildlife trusts in the UK and we have donated £38 million to bring back temperate rainforests across the west of the UK. We’ve given £21 million to bring back salt marshes,” said Blamey.
“All of these things are great for nature but also great for climate adaptation, creating resilience against flood risk,” she added. “We’re learning so much from these projects, [and helping with] carbon sequestration at the same time.”
Blamey said that the interaction between nature loss and the climate transition process that has been overlooked – although things may be changing. The two most recent COPs held by the UN Convention on Biological Diversity saw unprecedented levels of interest from business, and the finance sector in particular. Blamey said that the last one – which took place in November in Cali, Colombia – attracted many more businesses that hadn’t really been engaging before.
“I think people are starting to really understand the impact of nature on their businesses, whether it’s in their supply chains or, for an insurer, in terms of how this can help with things like flood resilience,” she said.
Competing priorities
For any company looking to move towards net zero, one fundamental question lingers: how can this path be walked so that disruption to day-to-day management of the business is limited?
In some respects, this could be seen as an easier task for an insurer, since the dangers of climate change are intrinsically linked to the long-term risk of the business.
Last month, a board member of insurer Allianz, Günther Thallinger, acknowledged that the world is fast reaching a point where insurers may not be able to offer coverage for many of these climate risks – so something needs to change.
However, treading this path and making sure that the stated goals are met, requires an organisation-wide approach to the transition.
“We see sustainability as the fourth pillar of our strategy, and it is fully integrated into our decision-making process,” said Blamey. “We have a huge upskilling and training element to our sustainability strategy, and this cuts across the whole organisation.”
This means making sure that all members of the companies, from underwriters and fund managers to members of the board, are all moving in the same direction.
Aviva runs regular internal training seminars throughout the business. It also has a number of committees responsible for driving sustainability throughout the organisation. The Sustainability Ambition Executive Committee meets once a month, and helps inform decisions taking at board level. Blamey says that a robust governance strategy helps hold members of the executive committee and middle managers to account in case any targets slip.
“We have set out what the next three years look like. We now have to get on and deliver this,” said Blamey. “Having sustainability fully integrated into every part of the organisation helps us work through our business plan and take the necessary decisions.”
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