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 GCE 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, 130 engagements were conducted with companies held in the GCE Strategy, 125 of which involved substantive, tailored dialogue. These efforts yielded 55 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.³

³We 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 MSCI ACWI.

This distinction is important as all portfolio holdings have already met a high threshold through our transition risk framework, solutions framework and deep-dive analysis. The alignment categorisation therefore help 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 GCE Strategy, helping to sustain momentum and foster constructive discussions around climate action.

CTEP		Aviva Investor Engagements
63	Number of Engagements	1320
41%	Percent of Substantive Engagements⁴	80%
29	Number of Engagement Outcomes⁵	323

⁴ Substantive engagement is defined as engagement typically involving active, in depth, bespoke dialogue with the corporate.
⁵ Changes in the behaviour of an entity that are in line with one of our prior engagement asks.

2025 CTEP Highlights

8

holdings achieved validated near-term SBTs

3

holdings achieved validated net-zero SBTs

18

holdings improved on their previous years CDP climate disclosure score

Shining a light on companies demonstrating climate action:

ING Group: Achieving validated near-term SBTs is especially significant for ING, 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.

Alphabet: Alphabet’s 2025 validated SBTs stand out due to the energy-intensive nature of its AI and data centre operations. Setting ambitious targets in this sector is challenging, making their progress a crucial step in driving innovation and transparency towards a decarbonised digital economy.

Hubbell: Over the course of the climate engagement programme, we held seven targeted engagements with Hubbell and escalated our concerns at the company AGM from 2022 to 2024. Encouragingly, Hubbell has made notable progress on our CDP disclosure request: after not disclosing in 2021, the company improved its score from D in 2022 to C in 2023, and reached B in 2024. This upward trend reflects Hubbell’s commitment to greater transparency. We have since ceased escalation efforts against this holding post-2024.

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.

Barriers To Decarbonise: TSMC

Physical Climate Risk: Munich Re

Decarbonising Hard-to-Abate Sectors: CRH

Taiwan Semicondustor Manufacturing (TSMC)

As part of our thematic engagement on cross‑sector climate challenges, we explored how semiconductor manufacturing can decarbonise while enabling global energy efficiency gains.

CASE STUDY: BARRIERS TO DECARBONISE

Engagement Focus
We spoke with TSMC to understand sector‑wide constraints around:

emissions from advanced‑node, gas‑intensive production;
chip‑level efficiency for AI and high‑performance computing;
rising customer expectations for transparency; and
limited renewable energy availability in Taiwan.

Key Insights
TSMC highlighted the sector’s core tension: manufacturing emissions continue to rise as chip complexity increases, even though these chips significantly improve downstream efficiency. The company is progressing on high‑GWP gas substitution and expects emissions to peak in 2025 as more renewable supply becomes available.

Sector Implications
This engagement deepened our view of the structural barriers facing semiconductor decarbonisation – particularly renewable access, process gas dependency and transparency gaps – while reinforcing the industry’s critical role in enabling global energy‑efficient technologies.

Munich Re

As part of our thematic engagement on climate adaptation, we examined how insurance and reinsurance can act as enablers of resilience to physical climate risks – an area not well captured by current solution taxonomies but increasingly material to our investment view.

CASE STUDY: PHYSICAL CLIMATE RISK

Engagement Focus
We engaged Munich Re to understand:

how catastrophe reinsurance supports climate adaptation;
the role of climate‑related underwriting in strengthening resilience; and
how these activities align with the EU Taxonomy and broader adaptation frameworks.

Key Insights
Munich Re emphasised that catastrophe reinsurance is fundamental to adaptation, enabling communities and economies to absorb climate‑related losses and recover more rapidly. Products covering storms, floods and wildfires help transfer risk and incentivise long‑term resilience planning. The company is also expanding parametric and weather‑indexed solutions, improving preparedness in regions underserved by traditional insurance.

The firm’s EU Taxonomy disclosures confirm that parts of its non‑life underwriting are recognised as contributing to climate adaptation, underscoring the sector’s systemic role.

Sector Implications
This engagement clarified how reinsurance functions as an adaptation enabler within the financial system. Insights will inform our ongoing assessment of adaptation‑focused insurance activities and their potential alignment with solution‑oriented investments.

^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 GCE 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 GCE Strategy. We will continue to leverage cross‑programme expertise to strengthen our stewardship of hard‑to‑abate holdings.

Climate Stewardship 2030 programme

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.