Sustainable, Responsible &/or ESG Policy:

Companies will be identified as Sustainable Investments if they satisfy the “Solutions” or “Transition” eligibility criteria and are not excluded from the investment universe. The Fund will follow the Investment Manager’s Sustainable Transition Equity Exclusion Policy which is designed to ensure no significant harm

is caused to natural capital, people or the climate. The Investment Manager’s Sustainable Transition Equity Exclusion Policy is comprised of three levels of exclusions:

• Level 1: The Investment Manager’s ESG Baseline Exclusions Policy.
• Level 2: A set of exclusions that apply across all equity Funds in the Sustainable Transition fund range focusing on climate, nature and social related issues.
• Level 3: Where relevant, exclusions specific to the Fund.

Further information on the Sustainable Transition Equity Exclusion Policy can be found within the Annex III Pre-contractual Disclosure and on the website https://www.avivainvestors.com/en-gb/about/responsible-investment/policies-and-documents/

Process:

The strategy employs an active, fundamental, research-driven approach to capturing opportunities arising from the transition to a more nature positive economy. The strategy’s key performance driver will be bottom-up stock selection which leverages off the combined connected analytical resources of our ESG and equities investment teams.

1.Avoid significant harm

There are over 80,000 listed stocks globally, of which over 6,000 have a market cap of over $1bn and trade an average of $10m a day or more. We would be willing to go below these thresholds in certain situations, but broadly this is what we consider our starting investment universe.

We then apply our exclusions to this universe – we have baseline exclusions which extend across the firm, exclusions specific to the sustainable transition portfolio range and those exclusively for the Natural Capital Transition Global Equity strategy.

2.Natural Capital overlay

We then look to identify two groups of companies – Solutions and Transition. Our Solutions database generates a universe of around 1,000 stocks judged to have over 20% revenues from products and services crucial to reducing human impact on nature, which is combined with the approximately 1,000 transition leaders identified today by our proprietary Transition Risk (T-risk) model.

Transition sleeve

Including Transition companies is a unique approach across our Sustainable Outcomes range. For the Natural Capital Transition Global Equity strategy, we look for companies leading in their sector in reducing their impact on natural capital, thereby supporting the transition to a nature-positive economy. We identify these companies using our proprietary natural capital T-risk model, based on the following steps:

• Top down natural capital profile
• Bottom up management assessment, using 41 NGO rankings and 4 traditional data providers, different metrics assessed for each sector
• Deep dive analysis

Step 1: top-down natural capital profile

We use 5 NGO datasets and our proprietary methodology to classify 158 sub-sectors into having a low, medium or high impact on nature. Every sector impacts nature in quite different ways, and a universal standard metric to assess impact on nature across all sectors equivalent to CO2 emissions for climate change does not exist, so we choose a different set of impact indicators for each sector. For example, a beverage company has key impacts via water use, packaging and sourcing of ingredients such as sugar, whilst for a bank it would be more pertinent to assess whether it has a zero deforestation policy and whether it is underwriting new fossil fuel development.

We categorise sectors as high, medium or low risk because in our framework, firms in higher risk sectors are subject to more demanding thresholds to be contenders for inclusion in our portfolio.

Step 2: bottom-up management assessment

We use a total of 45 data sets, 41 of which are specialist NGO data sets on specific issues such as deforestation, sustainable protein, packaging, and chemical use. A non-exhaustive list is highlighted below:

We then measure a company's performance on a set of metrics that is carefully chosen as the most pertinent for its sector so we are not just assessing whether a company has a biodiversity policy or not, but rely on this wide range of data, as well as our ESG sector analysts and our Earth Pillar lead’s 22 years of experience working on environmental issues, and her tenure at Greenpeace, to aim to avoid greenwashing and find real sector leaders.

Step 3: ZSL deep dive

We have commissioned the Zoological Society of London (ZSL) to complete a deep dive assessment for each company in the portfolio, which acts as an independent expert assessment on top of our internal review. Together we created a proprietary assessment framework just for this strategy. ZSL have extensive experience in assessing companies on sustainability, through their annual SPOTT1 rankings of companies on deforestation.

1 Sustainable Palm Oil Transparency Toolkit.

Solutions sleeve

Investing in companies whose products or services provide solutions to the reduction of human impact on nature is the other important sleeve in our strategy. We look for companies providing solutions in each of the same four pillars in our investment approach previously illustrated, with examples as follows:

• Circular Economy – sustainable packaging solutions, recycling & reuse technologies, waste treatment services.
• Sustainable Land – plant-based proteins, precision agriculture, and sustainability verification.
• Sustainable Ocean – water treatment solutions, sustainable mariculture & aquaculture, and plastic reduction & biodegradable materials.
• Climate Change – in addition to the more recognisable but still important themes of energy efficiency, renewables, green buildings & transport we also seek companies that enable the climate transition journey, for example through management consultancy advice to corporate and government projects on carbon reduction.

One common characteristic for these solution companies is that regardless of the stage of business, be it mature companies or early-stage start-ups, they provide products and services that are crucial to reducing impact on nature, and we believe the longevity and the magnitude of the earnings growth linked to their business model is underestimated by the market.

To identify these firms, we leverage three independent data sources (FTSE Green Revenue, MSCI and Moody’s/Vigeo Eiris) as well as our internal knowledge and expertise across our equity and ESG sector analysts.

We apply a minimum 20% solution revenue threshold for materiality of their impact whilst also keeping flexibility with a 10% soft bucket for new and emerging solutions that may not yet reach the 20% threshold but have a very strong growth potential or make a crucial contribution to protecting biodiversity.

We believe our solutions and transitions sleeves provide a strong starting pool of ideas from which our global equity investment and ESG teams conduct fundamental research. However it’s important to emphasise the scope for circularity in our investment process between the Natural Capital Overlap and Fundamental Analysis stages. Given the strong focus from our equity and ESG teams on idea generation for our sustainable transition equities strategies, there is flexibility for stock ideas to be proposed by those teams that may not have initially been identified by our solutions or transitions sleeves, or not passed an initial liquidity filter. These ideas will then be assessed by the relevant solutions and/or transition methodology.

3.Fundamental research

Every member of our investment team has analytical responsibilities and works together in ESG integrated sector hubs to generate ideas that can be applied across our strategy range.

Our regular meeting cycle facilitates the generation and debate of coherent, high conviction ideas across the equity team and the company’s wider investment platform, including Credit and Multi-asset & Macro capabilities. We believe what sets us apart is our ability to integrate and maximise our resources both within the equity team and across asset class boundaries.

Our meeting cycle includes a range of PM, Analyst and sector led discussions alongside broader meetings where insight is shared across the liquid markets investment platform.

Equity Sector Hubs facilitate a deeper understanding of sector-specific insights and investment recommendations:

• Discuss changes in positioning
• Challenge investment recommendations
• ESG and engagement updates
• Update on industry trends and themes
• Company meetings and views
• Investment deep dives

Company management contact is another important source of insight. Company meetings are led by the analyst covering that stock with attendance of other colleagues from the wider equities, credit or ESG teams.

New stock ideas are captured in a formal research note that covers four key areas with an investment recommendation assigned.  The research template is common across of the team to enhance information flow and applicability of ideas across strategies.

Fundamental research framework

The common research template provides an important level of core consistency for our fundamental equity analysis whist still retaining some flexibility to adapt its application across different industry sectors where certain considerations are more pertinent than others. We have provided some example applications of our research framework as follows:

Fundamental drivers – linked to evaluating the company’s competitive advantage we assess its scale in the context of the industry consolidation. How does this link through to pricing power, ROCE, other forms or returns and cash flow generation. What are the industry structural growth dynamics, how sustainable are they, how exposed is the company to those, and how durably can this translate to cash flow and returns? What level of cash flow generation and leverage is being generated from the company’s capital allocation decisions.

Valuation & materiality – as fundamentally driven investors, discounted cash flow analysis is often a key part of our valuation assessment. Dependent on the company and sector under coverage, we flex various DCF inputs to reflect our views vs. consensus on the sustainability of growth and returns, which we translate to a view on the company’s intrinsic value and scope for potential re-ratings. For certain sectors, we may also consider various relative valuation techniques and multiples, such as P/E, P/B, P/S, PEG, EV/Revenue, EV/EBITDA, FCF Yield, ROIC, Net Debt/EBITDA.

Key risks – in a world fraught with uncertainties, it’s critical to clearly identify the key risks to the investment thesis. Linked to several of the risks described above is ESG risks – the key is translating that into the probability of the financial risks occurring, their magnitude and how that can impact the overall investment thesis.

Investment opportunity – what are the key aspects that translate our fundamental equity analysis into an investable company. What are the structural investment thematics, translation into earnings, and where is our differentiated angle vs. the market? For example, what is our visibility and conviction on management strategy, pricing, EPS growth and earnings resilience.

This consistent expression of our ideas in this structured way enables effective peer review and debate of each stock idea. It allows us to effectively compare ideas across various sectors and focus on where we have highest conviction and highest upside ideas backed by stock-specific non-consensus insights.

ESG analysis integrated into fundamental analysis

To undertake a proper and comprehensive ESG analysis, we believe a responsible investor needs to consider a wide variety of perspectives and how these interact to complete the picture. Our Liquid Markets investment teams are supported by a well-resourced ESG platform. ESG insight is used to help drive better investment decision-making through analysing ESG factors as part of the investment case

Bottom-up research is provided by our ESG research & Stewardship team while top-down thematic impact-oriented research is provided by the Sustainable Outcomes team.

ESG Corporate Research

Our ESG corporate analysis is rigorous, leaving no stone unturned. We bring together and connect:

• Quantitative ESG metrics which allow portfolio managers and analysts to understand how an issuer compares to its peers. The scores can be used to highlight potential areas of concern that can be further investigated within our qualitative process.
• Qualitative research through two dedicated teams analysing corporate ESG credentials and alignment to systemic themes linked to the UN SDGs
• A fully integrated engagement approach coordinated by our dedicated Governance and Stewardship team to bring together research, knowledge and working with our investment professionals to deliver impact.

Our ESG analysis process is circular with a continuous feedback loop, where each pillar informs the other and ultimately our view of the company. To provide one example of this, our voting activities are used as one of the inputs in our Proprietary ESG scoring framework, which is described in further detail below.

All of this comes together, to empower portfolio managers with the ESG insights they need to integrate ESG into their investment process.

• Quantitative ESG research

The investment teams are supported by a variety of ESG data and analytical tools, including our proprietary ESG scoring tools and PAI (Principle Adverse Indicator) Framework underpinned by our PAI Notation Tool (PAINT).  We acquire data from various sources depending on purpose. These included traditional market data vendors, specialist companies, NGOs and directly from companies and other issuers.

Our Proprietary quantitative ESG score uses a combination of inputs from externally sourced data as well as our own voting data. It is designed to support our portfolio construction process by providing a relative score for the companies within each sector. The Proprietary score is a starting point for our investment teams, when evaluating ESG credentials, which is complemented by qualitative insights through the investment process.

Our investment professionals can leverage the ESG Proprietary score in their processes, where the score is integrated in portfolio management systems and therefore widely accessible. We are currently upgrading our quantitative ESG tools. Aviva Investors has developed a proprietary PAI Framework.  This framework and tool highlight where an issuer’s performance against an SFDR PAI Indicator potentially indicates a risk to the value or volatility of an investment and therefore may be material to an investment decision.  

• Qualitative ESG analysis 

ESG Analysts are aligned to the equity sectors and work closely with the relevant equity analyst to provide insight into sector and company specific ESG issues.

Research includes qualitative reports and verbal contributions to investment reviews and forums. In addition to company reports, the team produces (i) thematic research which focuses on current and emerging ESG trends and/or issues, which pertain to industry, regulatory or technological developments; (ii) industry/sector reports; (iii) high level primer reports discussing key ESG themes and trends. The ESG content produced supports investment decisions, education on sector specific ESG analysis, and engagement with companies and clients.

To further supplement the qualitative ESG input into the investment process, our Sustainable Outcomes team, produces top-down thematic research on the three Sustainable Outcomes we seek to deliver – People (social justice), Earth (nature positive) and Climate (net zero). These 3 objectives are formed from the 17 Sustainable Development Goals put forward by the United Nations.

Portfolio managers across all asset classes have access to research and insights on the major sustainability issues. This research informs portfolio managers and analysts from the top-down, which is complementary to the bottom-up analysis research produced by the ESG corporate research team and supports the integration of ESG considerations into the investment process across the firm.

• Engagement

We believe active ownership creates long-term value for our clients. Using our collective voice and power as an investor is central to support our long-term investment case and rationale.

We have provided our broader engagement approach in this section of the investment process. Details of the more relevant and bespoke engagement programme of the Aviva Investors Natural Capital Transition strategy can be found in stage 6 of the investment process.

In practical terms, this means monitoring, engaging, and, where appropriate, intervening, on matters that can have a material impact on the long-term value of our clients’ investments – issues such as board diversity, human rights abuses, and greenhouse gas emissions, avoiding adverse hits to the bottom-line.

We also utilise our voting rights as investors to hold companies to account on the extent to which they are protecting the long-term interests of investors and growing their businesses in a sustainable and responsible manner.

We direct our engagement resources towards maximising positive outcomes and informing our investment decision-making to add value to our portfolios, using the below framework:

• Thematic engagement
• Event driven engagement
• Collaborative initiatives

The framework is a coordinated approach across investment teams and involves dedicated engagement and voting experts.

Power through collaboration – to ensure efforts are joined-up and efficient. We have a dedicated Governance and Stewardship team, and they work to coordinate activities across our investment teams so we channel our collective voice to make an impact. Our ESG Corporate Research team and Sustainable Outcomes team (thematic research) provide the foundational research platform needed to inform how best to engage.

Delivering impactful outcomes – our engagement results are an important input for evaluating the long-term investment case. We enter every engagement with a clear expected ‘ask’ and outcome which we track. The progress and outcomes from engagement inform our investment research and determine next steps (refinement of engagement plan, escalation to votes etc). We have a clear engagement escalation approach - outlined in our stewardship statement - which lays out strategies to failed engagement, which in extreme cases leads to divest or cease to provide fresh capital to an investment. 

4.Stock selection

Our natural capital overlay and fundamental analysis stages of the investment process generate a list of approximately 100 potential investment ideas that fulfil both return and risk criteria from an investment perspective, as well as either passing as a solution or a transition leader. These ideas are then considered by the portfolio management team (Julie Zhuang and Jonathan Toub) and by the Earth Pillar Lead, Eugenie Mathieu, who corroborates the natural capital credentials of the companies and other risks we should be aware of.

5.Portfolio construction

The strategy is designed to be a 35-50 stock portfolio comprising of conviction holdings optimised for both alpha generation and to support the transition to a nature positive economy, whilst at the same time minimised for factor risk as much as possible. The portfolio is constructed consistent with strategy parameters including a guideline tracking error range of 2%-6% and manager outperformance objective of +2% p.a. vs. the MSCI All Country World Index benchmark (gross of fees, over a rolling 3-year period).

The portfolio is unconstrained by benchmark weights. Highest conviction stock ideas are balanced in the portfolio based on their contribution to total risk. This allows ideas across the market cap spectrum to be optimally combined in the strategy. Stock weightings reflect the risk-adjusted return expectations and fundamental conviction level. Stocks with higher forecasted upside, lower risk profile and lower correlation with other ideas will receive a higher active weight in the strategy.

The portfolio management team is cognisant of the thematic nature of the strategy and therefore the inherent sector, style factor and country biases. As a result, the strategy is constructed in a way to ensure maximum stock specific risks as opposed to systematic risks.

Portfolio monitoring and risk controls

As part of our overarching risk management framework we combine the expertise of the portfolio management team as the first line of defence and our independent investment risk team as the second line of defence to continue to deliver the following:

• Monitor any style drift or factor bets: portfolio managers and our independent risk team utilise leading risk tools and scenario analysis to ensure portfolios are primarily stock-driven rather than exposed to significant unintended macro, style or currency factors.
• Active stewardship: we vote and engage in partnership with our ESG team to promote sustainable business practices and on matters that can have a material impact on the long-term value of our investments.

In order to achieve this, we evaluate a range of characteristics including:

• Risk decomposition: breaking down and assessing all components that contribute to overall portfolio risks such as macro, style, industry sector, liquidity and right down to individual stock level to ensure a transparent understanding of where the key drivers of risk and diversification are for the portfolio.
• Scenario analysis: we replay historical events in history and forward looking “what if” scenarios on the current portfolio. Typically, one market parameter is “shocked” by e.g. 10% (e.g. MSCI World down 10%) then a correlation matrix subsequently shocks lots of other market parameters and evaluates how that would affect the current portfolio.
• Tracking error: we assess our risk deviation vs. each strategy’s benchmark to ensure we’re continuously using our risk budget to allocate capital to active positions but within the strategy’s tracking error range.
• ESG Analysis and Engagement: the proprietary ESG score1 for each stock is displayed for portfolio managers in the portfolio construction module of BlackRock Aladdin, our main portfolio management software. In addition, our independent investment risk team produce formal monthly reports detailing the top and bottom stocks by the proprietary ESG score as well as a summary at portfolio level. This provides key input into ESG risks which can influence our conviction in the form of position sizing an investment idea and help identify areas for future engagement with company management.

Sell discipline

Positions are initiated where the company has strong natural capital credentials and the portfolio manager has a strong ‘non-consensus’ view relative to the market and a clear catalyst that will change the market view and positively re-rate the stock has been identified. Peer review and debate of investment ideas ensures that robust challenge takes place to identify the best ideas, as determined by conviction and materiality, go into client portfolios.

The sell discipline is reflective of what drives the original ‘buy’ rating, i.e. a stock is sold when we no longer have a non-consensus insight, either because the investment case has materialised and is priced in by the market, the natural capital credentials of the company have deteriorated, or the portfolio manager/analyst has re-assessed the initial investment case and changed their view. An exception to this may be when the risk associated with the stock has heightened for reasons beyond what was included in the original research note, and this risk dominates the investment thesis and increases position volatility beyond an acceptable level given the outcome the portfolio is trying to achieve.

A further sell decision catalyst may also be a change in the investment team’s view on the relative attractiveness of other stock ideas, which may lead to replacing the stock with a more attractively valued opportunity.

The ultimate decision as to whether to buy or sell a stock is the responsibility of the portfolio management team, in close collaboration with the sustainable outcomes pillar lead.

6.Support the transition 

The objective of the strategy is to deliver long-term capital growth for our clients alongside supporting the transition to a more nature positive economy. We aim to generate positive outcomes through the following framework, which is comprised of three levers:

• Capital allocation
  • Given the way in which companies operate and the products/services they provide can have a profound impact on nature, choosing which companies to invest in and signalling this to the wider market can have a positive effect on advancing companies that are helping reduce human impacts on nature. We aim to allocate client capital to companies providing solutions and driving the transition to a more nature positive economy through the 4 key themes of circular economy, sustainable land, sustainable ocean, and climate change (linked to the United Nations Sustainable Development Goals 12, 15, 14, and 13 respectively).
• Bespoke engagement2
  • We believe we can also support the transition to a more nature-positive economy by engaging with every holding in the portfolio, asking them to: 1) carry out an assessment of their biodiversity impacts and dependencies, 2) set quantified, timebound targets to reduce their key biodiversity impacts and 3) meet an ask specific to each company that is most material to their business model and key sector risks that they face. The companies’ progress towards meeting these asks is systematically tracked in a timebound programme, with an annual assessment of companies ranking them from laggards to leaders, and an escalation pathway for divestment if our engagement asks aren’t met to ensure our engagement has teeth.
  • This engagement stage of the investment process is highly informed by the deep dives carried out by the highly regarded team at the Zoological Society of London, with whom we collaborate to identify a bespoke engagement ask for all the positions in our portfolio. There is a feedback loop from positive or negative engagement with our portfolio holdings, with this influencing our stock level conviction and hence portfolio positioning.
• Macro stewardship
  • Tackling market failures relating to natural capital through collaboration and influencing policy reform can also support the transition to a more nature positive economy. Our Macro Stewardship team, led by our Chief Responsible Investment Officer Steve Waygood, and their initiatives are now aligned to our 3 sustainable transition pillars of: People (Social Transition strategy), Earth (Natural Capital Transition strategy) and Climate (Climate Transition strategies). For the natural capital transition global equity strategy, we intend to advocate for policies to protect and restore biodiversity ahead of COP15, due to be held in Montreal, Canada later this year, using our voice as a member of the Finance for Biodiversity policy committee and working leading stakeholders such as WWF-UK, Make My Money Matter, and TNFD. We also plan to advocate for increased use of disqualification for directors overseeing flagrant environmental breaches in the UK and the EU to disincentivise companies from destroying nature.

The destruction of the Earth’s natural capital is an incredibly complex, systemic issue that cannot be solved with a simple approach based on just one or even two of these levers. Doing so will fall short in tackling this issue. In order to meaningfully support the transition to a nature positive economy, we believe we need to have a coordinated, in-depth approach across these three levers. In simple terms, we seek to invest in the right companies, engage with them so they continue to improve, and reform the market so companies operate in a system that incentives good behaviour and punishes bad practice.

We think it is also vital to bring clients with us on this journey, and have two main client reports to help inform them of the outcomes their capital is supporting: a Quarterly Investment report and Annual Outcomes report. Further details in the reporting section.

1 Our proprietary tool emphasises the ESG factors which we determine are most closely correlated to potential financial outperformance. Accordingly, it should not be used as a comprehensive measure of the sustainability risks (or the overall ESG quality/credentials) of a portfolio. ESG data for Benchmarks and Portfolios is reliant on: (i) data provided by third party data providers; and (ii) AI and third-party proprietary models. Data from these third-party data providers or used in our proprietary models may be incomplete, inaccurate or unavailable. As a result, there is a risk that AI may, from time to time, incorrectly assess a security, issuer or index. There is also a risk that AI, or the third-party data providers on which we may depend, may not interpret or apply the relevant ESG characteristics correctly.

2 Please note this engagement approach is targeted by the investment manager, subject to change and outcomes may not be achieved.

Resources, Affiliations & Corporate Strategies:

In-house resources, roles and responsibilities

The Sustainable Investing function at Aviva Investors contains 40+ specialists within several teams that report to the Chief Sustainable Investing Officer to support the wide-ranging activity that underpins our sustainable investing approach. 

The Sustainability Strategy team leads and co-ordinates sustainability strategy, commercialisation of our sustainability capabilities at firm level and institutional governance matters.

The integration and stewardship team covers all asset classes, including credit, equities and multi-asset in Public Markets, and real estate, private debt and infrastructure in Private Markets. The team oversees the integration of environmental, social and governance (ESG) factors into the investment process across Aviva Investors’ spectrum of liquid and illiquid assets. This includes proprietary quantitative scoring, bottom-up ESG corporate research, top-down thematic research and outcome related analysis. The team is also responsible for conducting stewardship activities with our clients’ investments; exercising proxy voting rights and engaging with investee companies and borrowers to enhance long term shareholder value. Our ESG integration and stewardship teams work closely, and have multiple touch points, with our public and private investment functions. This helps to ensure close communication and collaboration between our investment professionals and sustainability analysts. 

Our Sustainable Investments team oversees Aviva Investors’ sustainable funds. The team develops and evolves strategic frameworks that respond to the changing landscape of sustainable markets, ensuring tangible outcomes for clients. It works to enhance the philosophy and processes underpinning existing sustainable funds, including the development of supporting data, quantitative research models, and the measurement and delivery of sustainability impacts. The team also supports sustainability research across asset classes and plays a key role in the development of new sustainability and impact strategies.

We also have a team that works closely with our parent company, Aviva, to deliver on the investment components of the Aviva Sustainability Ambitions. This relates to climate, nature and social objectives and involves defining sustainability objectives and action plans. In addition, the team is responsible for building investment solutions to deliver on sustainability objectives as well as developing net zero and nature investment analytics and tools and the solutions linked to these capabilities.

Aviva Investors works in collaboration with the Group Public Policy team to engage with national governments, regulators, standard-setters and international institutions to develop and advocate for policy measures that aim to create more sustainable capital markets.

External resources/responsibilities

As an active manager we source information that, alongside investment research, can support regulatory and client reporting activity. We source sustainability data from a variety of data providers, which we review regularly. We hold regular reviews with our largest third-party data provider to discuss how continuous improvements could be made to data or research outputs. Additionally, we hold ad-hoc meetings to discuss broader trends in sustainability.

Our market data team is an independent function that manages commercial relationships and renewals with our market data service providers. This function operates an hourglass model that sits between the business and suppliers. There are regular reviews in place to check that contracts are still meeting business needs, including service quality, availability and accuracy of data.

Our investment engineering team is responsible for several models and analytical dashboards, using data science techniques to derive greater value from vendors, NGOs and proprietary sourced datasets. Dashboards provide transparency into the construction of models. Integration of model outcomes into our portfolio management tool allow analysts and fund managers to take these insights in consideration.

Examples of data providers used:

Data vendors – Large-scale providers with multiple datasets and deep coverage

• MSCI
• LSEG
• Trucost Analysis – S&P Global

Data specialists – Innovative and niche providers with specific scope and high quality

• BoardEx
• IBAT
• Iceberg Data Lab
• Auquan

NGOs - Specialist analysis, often not for profit; detailed datasets with issuer scope aligned to purpose

• CDP
• Climate Bonds Initiative

To support us in making voting decisions on thousands of meetings a year, we subscribe to research from third-party providers. Our main provider for voting services since October 2023 is Glass Lewis. We also subscribe to IVIS research (provided by the Investment Association) and MSCI. We use research for data analysis only and do not automatically follow research provider voting recommendations. We also receive recommendations from Glass Lewis based on our own policy, which we can override in consideration of other factors, including internal views, additional context provided in external research, and company explanations.

Briefly describe governance structure and responsibilities

The Aviva Investors boards, including Aviva Investors Holdings Limited, Aviva Investors UK Fund Services Limited, Aviva Investors Luxembourg (Lux.) Supervisory, Aviva Investors Lux. Management Company and Aviva Investors Lux. SICAV, receive regular reporting on key sustainability risk management metrics throughout the year. These include the results of sustainability risk assessments, do no significant harm indicators, climate value at risk and carbon intensity figures. These give the boards oversight of our approach to sustainability risk management and of how we are delivering on our clients’ sustainability preferences. In 2024, the Boards also received deep dives into climate metrics and the commercialisation of sustainability capabilities. We continue to develop and refine our approach to Board reporting to support effective oversight of our stewardship activities, including reviewing metrics to ensure they remain current and providing narrative and rationale to contextualise the sustainability information our boards receive.

The Aviva Investors Holdings Limited Board sets our overarching approach for sustainability. Responsibility for executive management of this approach is delegated to the CEO. The CEO is provided with advice and support from the executive team, which includes our chief sustainable investing officer.

The chief sustainable investing officer is responsible for proposing and implementing our sustainability strategy, oversight and execution policies and commitments at a firm and product level, and oversight of compliance with the relevant internal controls environment. Our sustainability strategy director chairs, on behalf of the chief sustainable investing officer, the sustainable investing business oversight committee, which includes representation from across the business. This committee ensures sustainable investing policies and procedures are aligned with firm-wide policies and procedures, and that the business is embedding client preferences in its approach to sustainability.

Working collaboratively with investment desks, the chief sustainable investing officer’s team is responsible for ESG integration and stewardship in public markets, ESG integration and stewardship in private markets, development of sustainable funds, development of sustainability analytics and tools, and sustainability strategy and governance.

Our analysts, regulatory development and client-facing teams monitor ongoing sustainability developments, with any revisions to policies subject to final approval by our policy approval group.

List related affiliations, memberships, and involvement with groups such as UNPRI / IIGCC / CA100+/CDP

The list below shows collaborative initiatives in which Aviva Investors participates as an active member, where we have participated in events or where we have indicated support for a statement as a signatory. More information regarding any of the initiatives or statements can be provided on request. This list is as of 31.12.2024 and can be found in our 2024 Annual Sustainability Review here: Policies and documents - Aviva Investors

Founding member

• Collaborative Sovereign Engagement on Climate Change
• Investor Action on Anti-Microbial Resistance
• Investor Initiative on Hazardous Chemicals (IIHC)
• Investor Initiative on Human Rights Data (II-HRD)
• Sustainable Stock Exchange Initiative
• UN Principles for Responsible Investment (UN PRI)
• World Benchmarking Alliance (WBA)

Memberships and working groups

• 30% Club UK Investor Group
• Advance
• Aldersgate Group
• Asian Corporate Governance Association (ACGA)
• Benchmarking Human Rights Performance
• Bondholder Stewardship Working Group
• Chatham House
• Climate Engagement Canada (CEC)
• FAIRR – Biodiversity, Waste and Pollution Programme
• FAIRR – Protein Diversification
• FRC UK Stewardship Code 2020
• GC100 and Investor Group – Remuneration Reporting
• Guidance
• GFANZ Policy Workstream
• Global Impact Investing Network (GIIN)
• Global Institutional Governance Network (GIGN)
• Good Work Coalition
• Global Real Estate Sustainability Benchmark (GRESB)
• Institutional Investors Group on Climate Change (IIGCC)
• Investor Policy Dialogue on Deforestation (IPDD) Initiative
• Labour Rights Investor Network (LRIN)
• Nature Action 100
• Net Zero Asset Managers Initiative (NZAM)
• ShareAction – Chemical Working Group
• Sovereign Debt Advisory Committee
• The Investment Association
• The Investment Association – Climate Change Working Group
• The Investment Association – Remuneration and Share Schemes Committee
• The Investment Association – Sustainability and Responsible Investment Committee
• The Investor Forum
• TheCityUK Sustainable Finance Forum
• Transition Finance Market Review Expert Advisory Panel
• UN Principles for Responsible Investment Sustainable Systems Investment Managers Reference Group
• VBDO (Vereniging van Beleggers voor Duurzame Ontwikkeling) Investor Statement on Plastics

Signatories and collaborative events

• Access to Medicine Foundation
• Carbon Disclosure Project (CDP)
• Climate Action 100+ (CA100)
• Global Investor Statement to Governments on the Climate Crisis
• Partnership for Carbon Accounting Financials (PCAF)
• Planet Tracker Plastic Pollution Investor Statement
• Rathbones Statement on Reporting Requirements re: Section 54 of UK Modern Slavery Act

SDR Labelling:

Not eligible to use label (out of scope)