Aviva and WWF team up for green finance drive

Aviva and WWF have teamed up to urge the government to require all UK regulated financial institutions to establish net zero transition plans by 2023 that put them on track to achieving the Paris Agreement's more stretching 1.5C warming target.

In a policy paper published late last week, the insurance giant and environmental NGO set out five recommendations for how the government can harness the finance sector to drive the transition to net zero emissions.

It calls on the Treasury to recommend that regulators mandate regulated financial institutions to start producing net zero aligned transition plans by the end of 2022 and require all institutions to have plans in place by the end of the following year.

In addition, the UK should use its platform as member of the G7, G20, and other multilateral organisations and forums to encourage other major economies to follow suit and mandate transition plans, the partners argue.

They have also called on the UK government to bring together regulators, industry, and civil society to develop guidance for the most appropriate metrics, methodologies, and specifications to underpin transition plans. Ministers should create a "clear policy framework to drive net zero across the real economy" that includes steps and specific timescales, the report states.

The government has long insisted that it plans to make London a hub for 'green finance' in the wake of the UK's departure from the EU and earlier this year the Treasury embedded net zero in the mandate of the UK's key financial regulators. The UK also helped secure an agreement at the recent G7 Summit, which will see the world's richest democracies introduce new rules requiring all listed firms to report on their climate-related risks in line with the guidelines established by the Taskforce on Climate-related Financial Disclosures.

However, some investors and campaigners want to see the proposed new regulations move beyond simple risk disclosure and require firms to develop credible decarbonisation plans. The Treasury has also faced growing criticism from campaigners and MPs who argue the department is not doing enough to update the UK's tax and regulatory system in support of the country's climate and environmental goals.

A spokesperson from The Treasury emphasised the financial system would be cricial to meeting the UK's net zero ambitions. "The UK was the first major economy to commit to net zero by 2050 and we're harnessing the power of the financial system to help us achieve that," the spokesperson said. "That includes making climate disclosures mandatory across the economy by 2025, requiring our financial regulators to take our net zero commitment into account, announcing plans for the UK's first ever green bond and setting up a UK Infrastructure Bank which will unlock investment in the transition to net zero."

Aviva and WWF published the policy recommendations as they announced a new parternship that will focus on accelerating the finance sector's pursuit of a lower carbon future.

Aviva Group CEO Amanda Blanc said the firm had a responsibility to address the climate emergency as the UK's "leading insurer". "Our new partnership with WWF will help us tackle the causes of climate change and help our customers and communities cope better with the consequences," she said. "We will campaign with WWF to ensure the financial sector gets its act together and makes a more significant contribution to a sustainable planet".

The announcement comes just a month after a report from WWF and Greenpeace revealed the UK's banks and asset managers were responsible for financing 805 million tonnes of CO2 in 2019, 1.8 times the UK's annual net emissions that year.

Tanya Steele, chief executive of WWF-UK, said the finance sector had a "staggering climate footprint" but that the industry could be a "force for positive change". "Aviva is already a climate leader in the industry and demonstrates the enormous potential for our pensions and insurance in helping to tackle the environmental crisis," she said. "Together, we hope to inspire other financial institutions along this journey and to jointly call for ambitious government reform of the sector in the run-up to COP26."