Active Ownership

Active
Ownership

Climate Transition Engagement
Programme: Advancing Our
Commitment

Dynamic and accountable active ownership is a core element of our investment philosophy. Through purposeful engagement with investee companies, we aim to protect and grow long‑term value for clients while supporting the shift to a resilient, low‑carbon economy.

As a central pillar of the GCC Strategy, the Climate Transition Engagement Programme (CTEP) strengthens this commitment by encouraging companies to develop credible, transparent transition plans and by guiding our stewardship activities across strategy holdings.

CTEP Evolution

2023

2024

2025
Programme Evolution

2027

2026

2022
Programme Launch

CTEP: Phase 1

CTEP: Phase 2

During Phase 1 of the CTEP, 215 engagements were conducted with companies held in the GCC Strategy, 196 of which involved substantive, tailored dialogue. These efforts yielded 73 outcomes, including increased adoption of science-based emissions targets and improved climate disclosures.

In 2025, we evolved the CTEP to better reflect the changing climate landscape. This included the addition of a new engagement ask focused on long-term emissions reduction targets, recognising the importance of assessing transition strategies beyond 2030.

Reflecting on key takeaways over the last three years of the programme - we recognise the challenges some companies and sectors may face with regards to meeting our asks which are specific to certain industry bodies. Therefore, where material barriers exist, we will consider credible alternatives based on our internal assessments, ensuring a pragmatic yet ambitious approach to driving net-zero progress. We also broadened our approach to include thematic and reactive engagements alongside proactive dialogue.

Engagement Levers

Proactive Engagement

Thematic Engagement

Reactive Engagement

Ongoing dialogues with selected companies to drive progress on climate transition plans.

Focused initiatives addressing cross-sectoral climate challenges, such as supply chain emissions or adaptation strategies.

Targeted interventions triggered by material events, regulatory changes, or new disclosures.

Our asks to accelerate climate action

Near-Term SBTs

Companies to set credible short-term emissions targets aligned with SBTi.

Long-Term Targets

Clear emission reduction
plans and commitment to a
1.5°C pathway beyond
2030.

CDP Disclosure

Annual climate reporting to CDP for transparency and accountability.⁴

⁴We recognise that not all companies currently have validated Science-Based Targets or disclose through CDP. Where material barriers exist, we will consider credible alternatives based on our internal assessments, ensuring a pragmatic yet ambitious approach to driving net-zero progress.

Monitoring Progress

We assess company alignment with our climate expectations through an annual qualitative review, evaluating how closely each firm aligns with our engagement asks, categorising companies from ‘Not Committed’ to ‘Aligned’. These ratings are relative within our portfolio and are not benchmarked against external indices such as the BBG Aggregate Global Corporate Index.

This distinction is important as all portfolio holdings have already met a high threshold through our thematic risk framework and solutions framework. The alignment categorisation therefore helps us differentiate between companies that are already performing well, highlighting relative leaders and laggards.

This structured approach enables us to track progress, refine our engagement strategies, and support continuous improvement across the portfolio.

Escalation and Impact

In 2025, our escalation approach continued to evolve. We maintained active engagement with stakeholders across Aviva Investors Sustainable Fund range, prioritising consistency and shared accountability in our climate actions. Engagement progress is monitored, with careful consideration of the individual circumstances and limitations faced by companies and sub-industries. Where engagement efforts do not result in meaningful progress, we remain prepared to reduce exposure or divest, underscoring our ongoing commitment to climate integrity and responsible stewardship.

Programme Progress

In 2025, we engaged with every company participating in the CTEP as part of the programme update. This approach allowed us to maintain ongoing dialogue with firms across the GCC Strategy, helping to sustain momentum and foster constructive discussions around climate action.

CTEP		Aviva Investor Engagements
97	Number of Engagements	1320
30%	Percent of Substantive Engagements⁵	80%
18	Number of Engagement Outcomes⁶	323

⁵ Substantive engagement is defined as engagement typically involving active, in depth, bespoke dialogue with the corporate.
⁶ Changes in the behaviour of an entity that are in line with one of our prior engagement asks.

2025 CTEP Highlights

1

holding committed to a net-zero SBT

6

holdings achieved validated near-term SBTs

2

holdings achieved validated net-zero SBTs

9

holdings improved on their previous years CDP climate disclosure score

Shining a light on a company demonstrating climate action:

ING Group achieved a validated near-term SBT, which is especially significant given the inherent complexity of decarbonising the banking sector’s financed emissions. Their commitment demonstrates leadership in redirecting capital towards lower-carbon activities, despite the sector’s exposure to high-carbon assets and systemic climate risks.

Company alignment

As the programme progressed throughout 2025, we undertook a re-baselining of company alignment scores. From this point forward, the alignment levels established in 2025 will serve as our benchmark for tracking and assessing future progress. The chart provides a summary of the overall alignment levels for companies held across the strategy in 2025.

Hover over the chart to see companies that are demonstrating alignment to our asks.

CASE STUDIES

Thematic engagements

Thematic engagement allows us to explore sustainability issues within sectors that are strategically important to our investment approach. These engagements deepen our understanding of industry‑specific challenges, inform internal research, and help reassess our position on material sustainability themes.

Click to jump to any case study or read on to discover more.

Physical Climate Risk: Commonwealth Bank of Australia

Energy Resilience: Iberdrola & EDP

Decarbonising Hard-to-Abate Sectors: CRH

Shifting the Dial on Disclosure: Bank of America

Commonwealth Bank of Australia

Physical climate risks are emerging as a critical consideration for banks with large, geographically concentrated mortgage portfolios. This thematic engagement focused on how lenders are identifying, managing and disclosing exposure to climate‑driven hazards such as floods and wildfires, and the implications for long‑term portfolio resilience.

CASE STUDY: PHYSICAL CLIMATE RISK

Engagement Focus
For the Commonwealth Bank of Australia (CBA), understanding how the bank manages the physical impacts of climate change is particularly material given its domestic focus, Australia’s exposure to wildfires and floods, and the fact that over 60% of its lending book is in residential housing.

Key Insights
CBA noted growing pressures around insurance affordability and availability in high‑risk regions, though these have not yet resulted in material credit losses or property devaluations.

Much of the near‑term financial burden falls on households, with local governments often acting as insurer of last resort. The bank stressed that government adaptation efforts remain reactive, contributing to long‑term uncertainty, but its own exposure to the highest‑risk regions is relatively limited given their remoteness.

Sector Implications
This engagement highlights how physical climate risks are becoming more systemic for banks with sizeable mortgage portfolios. While immediate financial impacts may be limited, underinsurance, increasing natural‑disaster losses and slow adaptation measures could pressure credit performance over time.

For lenders in climate‑exposed markets, robust scenario analysis, consistent disclosure and clearer adaptation policy signals will be essential for maintaining portfolio resilience.

Iberdrola & EDP

The rapid expansion of energy‑intensive digital infrastructure is creating new challenges for power systems seeking to decarbonise. This thematic engagement explored how sustained, high‑load demand from data centres is reshaping electricity markets and complicating utilities’ ability to deliver absolute emissions reductions alongside continued renewable deployment.

CASE STUDY: ENERGY RESILIENCE

Engagement Focus
This engagement examined how growing digital infrastructure is influencing Iberdrola’s and EDP’s transition strategies, particularly generation mix choices, grid investment and emissions trajectories.

We aimed to understand whether current plans for renewables, storage and system flexibility are sufficient to deliver absolute emissions reductions, rather than primarily serving rising electricity demand.

Key Insights
Both Iberdrola and EDP reported a sharp increase in electricity demand linked to hyperscale data centres, with heightened interest in long‑term PPAs. Although renewable capacity continues to grow, a rising share of this generation is being consumed by new digital infrastructure rather than displacing existing fossil fuel supply.

EDP highlighted that meeting continuous demand increasingly depends on battery storage and flexible generation, while grid reliability concerns in Spain have slowed the pace of fossil fuel phase‑out. Iberdrola similarly noted that in regions with slower grid upgrades, gas generation remains necessary to balance the system, raising the risk that renewable expansion primarily accommodates demand growth instead of accelerating decarbonisation.

Sector Implications
This engagement highlights a structural challenge emerging across energy systems: surging digital‑infrastructure demand risks slowing decarbonisation progress. Without faster grid expansion, multi‑day storage solutions and greater policy support for system flexibility, utilities may struggle to reduce emissions even as they deploy large amounts of renewable capacity.

For investors, this underscores the importance of assessing whether utilities’ transition plans fully account for rising baseload demand from data centres and whether renewable growth curves are sufficient to drive absolute emissions reductions, rather than simply meeting new load growth.

CRH

A key enhancement identified in last year’s reporting cycle was the need to strengthen collaboration across stewardship programmes to deepen insight on shared holdings. In 2025, we began to leverage the Climate Stewardship 2030 (CS30) programme to support our thematic work on hard‑to‑abate sectors within the GCC Strategy.

CASE STUDY: DECARBONISING HARD-TO-ABATE SECTORS

Why we engaged
The CS30 initiative brought additional sector insight into our assessment of CRH, a major building materials producer. This collaboration enabled a more detailed assessment of CRH’s decarbonisation approach across both operations and the value chain. Launched in 2024, CS30 will run until 2030 and combines direct corporate engagement with companies that represent at least 50 per cent of Aviva Investors’ financed emissions in material sectors. This engagement is supported by high‑impact value‑chain mobilisation, bringing together key actors across hard‑to‑abate industries to drive tangible, lasting progress by influencing policies, advancing technologies, and shaping financial incentives.

Key Insights
CRH has developed detailed site‑level decarbonisation plans covering clinker substitution, alternative fuels and increased use of recycled materials, even where public disclosures are limited.

The company is already outperforming internal targets in areas such as alternative fuel use and limestone substitution, supported by sustained investment in plant capabilities and knowledge sharing. The engagement also highlighted progress on reducing value‑chain emissions through lower‑carbon construction products such as warm‑mix asphalt, alongside growing attention to physical climate risks and site‑level resilience planning. These insights strengthened our view of CRH’s ability to meet near‑term 2030 milestones while underscoring the need for continued dialogue on post‑2030 ambition and transparency.

Takeaways
By drawing on the CS30 programme, we were able to build a more complete picture of CRH’s decarbonisation approach – insights that directly inform how we assess credibility and resilience within the GCC Strategy. We will continue to leverage cross‑programme expertise to strengthen our stewardship of hard‑to‑abate holdings.

Click to learn more about the Climate Stewardship 2030 programme

Bank of America

High‑quality, decision‑useful disclosure is a critical lever for driving better sustainability outcomes in the financial sector. This thematic engagement focused on encouraging clearer, more transparent and forward‑looking reporting, recognising that how banks communicate on ESG issues shapes investor understanding, market standards and real‑world behaviour.

CASE STUDY: SHIFTING THE DIAL ON DISCLOSURE

Why we engaged
Over 2024 and into early 2025, we engaged Bank of America (BoA) across several material ESG priorities as part of our wider stewardship approach to strengthen sustainability practices and disclosure in the financial sector. This engagement spanned deforestation risk through a finance‑sector collaborative programme, governance topics including succession planning and remuneration, and climate strategy and disclosure through the CTEP.

Why it mattered
As one of the world’s most systemically important banks, Bank of America’s approach to sustainability reporting has the potential to influence market expectations well beyond a single issuer. Our sustained dialogue led to meaningful recognition of our stewardship input, culminating in an invitation to participate in an exclusive consultation to help inform the bank’s upcoming sustainability reporting. Only nine stakeholders were selected globally, of which just three were investment managers, and we were the only European firm represented.

Key insights
While the content of the consultation remains confidential, our participation demonstrates Bank of America’s proactive approach to seeking investor input on how it communicates sustainability topics. It also reflects recognition of our stewardship work as credible and decision‑useful, and signals a clear willingness by the bank to evolve its reporting practices in line with emerging expectations and global standards.

Influence on our investment view
This process helped reduce previous uncertainty and strengthened our conviction in Bank of America’s strategic direction. Greater openness and responsiveness enhanced our confidence in the bank’s approach to climate transition and broader sustainability themes, reinforcing our view of Bank of America as a serious and evolving ESG actor and supporting continued engagement.

Looking Ahead

Reflecting on our active ownership approach, we are genuinely pleased with the successful launch of the evolved CTEP. The programme has enabled us to deepen our stewardship, foster cross-strategy collaboration, and bring sharper focus to transition pathways across hard-to-abate sectors. Our enhanced methodology has already delivered valuable insights and strengthened our engagement outcomes, laying a robust foundation for future progress.

Looking ahead, we are excited to build on this momentum in 2026. By further leveraging internal expertise and maintaining a pragmatic yet ambitious approach to target-setting and disclosure, we are confident that our active ownership will continue to drive measurable impact. With renewed energy and a clear vision, we remain committed to guiding our holdings through the complexities of the climate transition, ensuring resilient investments and meaningful change for the years to come.