Big Money Talks: Aviva Investors £47B Net Zero Carbon Pledge Makes Green Real Estate Goals Mainstream

Aviva Investors has pledged that its entire £47.3B property portfolio will record net zero carbon emissions by 2040. It also plans to extend the commitment to the complex world of private debt.

The move, the latest in a series of commitments to the sustainability agenda by property’s Big Money, will increase pressure on other developers and on occupiers.

The announcement follows the recent launch of Aviva Investors’ proprietary Sustainable Transition Loans Framework by its real estate debt team to ensure sustainability-linked loan principles.

The pledge from the global asset management business of Aviva will see improvements to the sustainability of new and existing building stock across the UK. The asset manager said it will support clients in addressing the climate transition within illiquid assets.

The commitment covers all layers of the investment process from asset origination to asset management and ongoing stakeholder engagement. It will also take the policy into private debt, an area where many major investors have preferred not to take their climate transition strategies, viewing it as too complex.

The commitment includes a series of explicit short-term interim goals that Aviva Investors expects to be delivered over the next four years to 2025. These include investing £2.5B in low-carbon and renewable energy infrastructure and buildings; increasing low-carbon and renewable energy generation capacity to 1.5 gigawatts; originating £1B of climate transition-focused loans; and reducing real estate carbon intensity by 30% and energy intensity by 10% in its portfolio.

The real assets business at Aviva Investors is expecting at least £500M of newly originated assets each year to be low-carbon or renewable, with additional investments being made into transition-focused assets such as energy-efficiency improvements to existing real estate and social infrastructure.

“The climate crisis is the single largest risk facing our society and economy, but it also represents great opportunity," Aviva Investors Chief Executive Mark Versey said.

"The real assets sector wields a great deal of investment influence and firepower and must quickly move on from high-level pledges to demonstrate meaningful action. The goals of our net zero commitment are ambitious and, most importantly, set out material proof-points that we can be measured against.”

Direct emissions from buildings, power and transport are responsible for 60% of UK emissions.

The Aviva strategy document can be found here.