John Ainley
Group human resources director
Dear Shareholder,
Around the world Aviva is committed to attracting and retaining the best talent available. We aim to engage our people in their work, achieve our ambitions and provide a great customer experience. The key to our success is great leaders, making the most of all our talents and exploiting our international opportunities. Aviva has to be a company people want to work with and our people strategy is focused on achieving that.
Responsibility
We are aware of our responsibilities and are committed to behaving in a socially responsible way. How we do business helps us to achieve our ambition of being the world’s most trusted savings, investments and insurance provider.
I am determined that we will maintain our sector-leading reputation in corporate social responsibility (CSR) and we have further important initiatives underway to keep us there.
2006 developments
In 2006, we implemented a worldwide employee survey that allows us to benchmark our performance as an employer against the best in the world, identify and share good practice, and focus our efforts on issues that mean the most to our employees.
We launched task forces on three key people-related challenges: building great leadership across Aviva; delivering talent management offerings that enable our people to achieve their potential; and leveraging the power of the Aviva brand for our current and future employees. I am confident we will be able to report significant benefit from these initiatives next year.
Keeping Aviva fit for the future remains vital and not all the answers are easy ones. In 2006, we announced plans to restructure our UK businesses to improve both efficiency and the service we provide to our customers, with the loss of 4,000 jobs. We will do all we can to minimise the impact on individuals through management of turnover, redeployment and voluntary departure. We will help those who leave the business to do so with dignity and support.
The formation of a board CSR committee in 2006 raised further the profile of our CSR agenda. Our decision to carbon neutralise our operations worldwide represents a significant commitment. Aviva is the first global insurer to commit to doing so. We also became a founder member of Oxfam’s 365 Alliance, ensuring that Oxfam has pre-committed, planned resource in anticipation of any disaster across the globe.
Valuing diversity and respect at work are a fundamental part of our culture. In 2006, we launched a global senior women’s network group, introduced a range of recruitment practices aimed at attracting minority groups and provided tools to encourage our employees to engage with and understand our diversity agenda.
Our rapid progress as a forward thinking employer has been recognised through several awards, such as inclusion in The Times “top 50 places where women want to work,” (Aviva being the only company to feature in all categories assessed) and the city category award from Opportunity Now.
Outlook
We have begun 2007 by welcoming, as Aviva employees, 1,500 people in India who had been serving our customers through third-party employers. That process will continue this year.
We will continue to build our reputation as an employer of choice and a responsible corporate citizen. Our people and CSR agendas are at the heart of that ambition and I look forward to reporting next year on the progress we have made in 2007.
John Ainley
Group human resources director
Aviva was one of the first companies to join the Oxfam 365 Alliance, a new initiative developed by Oxfam GB to support its global emergency response operations. To join the Alliance, companies must commit to providing between £500,000 and £1 million over three years. The funding will provide extra help for the international charity’s expanding rapid response team of aid workers and will help run the warehouse which stores one of the world’s largest supplies of emergency equipment. With these resources, Oxfam will always be ready to deal with disasters immediately, wherever and whenever they occur. Oxfam will also provide aid to crises which often go unnoticed by the world’s media.
For Aviva, the Oxfam 365 Alliance is a perfect demonstration of forward thinking in practice. We are proud to be a part of it.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
Responsibility
Our ambition is simple: we want to be the world’s most trusted savings, investment and insurance provider. This means that we must always work to the highest standards of business conduct. This sits at the heart of our approach to corporate social responsibility (CSR).
We recognise there are multiple stakeholders in our CSR activities:
- Our shareholders, who wish to receive a return on their investment, but also to be assured that the company is behaving responsibly in how it operates
- Our customers, who rightly expect us to treat them fairly and to be open and honest in the products and services we offer them
- Our staff, whose engagement and commitment to delivering a great service to our customers is key. They want to be treated with respect at work and to feel proud of being a part of Aviva
- The communities in which we operate, and the suppliers and organisations with which we work, who want us to be a responsible employer and partner, thinking about the way we do business and acting responsibly to the benefit of all.
This review seeks to set out how our CSR activities support our overall business strategy while taking account of the views of our different stakeholders.
We report our progress on CSR fully in a separate annual CSR report, which is available online at www.aviva.com/csr.
CSR governance
We report annually in accordance with the FORGE management and reporting guidelines, and respect the disclosure guidelines issued by the Association of British Insurers.
In 2006 we established a Board CSR Committee, which met three times during the year. It is chaired by Aviva’s senior independent director, Wim Dik, and consists of Aviva’s chairman, three other non-executive directors and the group chief executive. It is responsible for CSR strategy and policy, and for reviewing the progress of our CSR programme. View the CSR Committee report.
We held an annual CSR review group meeting, bringing together CSR representatives from our business units, partner non-governmental organisations and external auditors. The review group looks at performance, developments and best practice; it exchanges ideas and initiatives and sets the direction for the year ahead. A CSR steering group meets three times a year to review progress.
Developing a diversity strategy and programme has been an important initiative during the past two years. Supported by Aviva’s annual global employee climate survey, our diversity aims have been integrated into our performance management process.
From January 2007, the CSR and diversity functions have been combined into one CSR team with a wider remit. This team will take the lead on a more comprehensive set of activities that form our CSR agenda. The wider remit establishes clearer accountability for the delivery of our CSR programme in one place.
To mitigate CSR risks, we have an established system of risk management embedded into our business planning and performance monitoring processes. Further details of this process are contained in the internal controls section of the corporate governance report.
Standards of business conduct
We are committed to conducting all aspects of our business to rigorous ethical, professional and legal standards. We regard ethical practice as critical to responsible business and have put in place measures to refresh regularly our employees’ understanding of our standards of business conduct policy.
The policy is reinforced by specific measures to tackle the challenge posed by financial crime. We have implemented policies that meet the requirements of applicable legislation, regulatory guidance and industry best practice regarding anti-money laundering, fraud management and malpractice reporting worldwide.
One of our chairman Lord Sharman’s first initiatives was to demonstrate our commitment to corporate social responsibility by creating a board CSR committee.
The committee comprises Lord Sharman, group chief executive Richard Harvey and non-executive directors Carole Piwnica, Guillermo de la Dehesa and is chaired by Aviva’s senior independent director, Wim Dik. The CSR committee met three times in 2006 to provide guidance and direction for the group’s CSR programme and monitor its progress.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
Customers
Given our ambition, we put our customers at the heart of everything we do. We are committed to:
- Having better insight on the events that shape our customers financial needs and designing products and service to help them meet those needs
- Providing customers with good service and information that is clear, balanced, fair and not misleading when they buy our products
- Helping our customers after they have bought our products by honouring our promises, giving good service, and providing helpful information
- Where appropriate, working with our customers’ financial advisers to serve our customer’s interests.
In 2006, the Board approved a group customer policy that embeds these commitments into the way we work in our businesses around the world.
This policy means that leaders in our businesses must demonstrate an uncompromising standard of commitment to customers, with performance against the policy measured as part of the way we look at business performance.
We comment here on progress across our core business activities under our key operating regions: UK, Europe and International and Morley.
United Kingdom
Norwich Union Life helped develop the Association of British Insurer’s Customer Impact Scheme. The scheme aims to improve performance across the life insurance industry and so improve the experiences of our customers.
This scheme helps support our obligations under the Financial Services Authority’s Treating Customers Fairly initiative. The Customer Impact Scheme includes:
- formal commitments by our board that put customer interests at the heart of our business
- participation in an annual in-depth customer survey to measure how well we are doing
- a detailed annual report showing how well we have met the customer commitments (available June 2007)
- a panel with members from both the industry and outside to oversee the scheme, advise the ABI and report on progress.
In helping to champion consumer issues, Norwich Union is collecting data from telematics black boxes on how often, when and where motorists drive. This enables both transparent insurance premiums and appropriate safety messages to different customers.
In addition, Norwich Union has numerous product innovations for example, discounted insurance for bio-ethanol fuelled Ford cars and a simplified life insurance product.
Europe
Aviva France has promoted the concept of “le bon conseil” stressing the importance of proper advice and research prior to purchase. In particular, we have been fast and efficient in our adaptation of new laws in comparison to market competition.
In Delta Lloyd, our Dutch subsidiary, all employees participated in a commercial training programme to help encourage the organisation to become more customer minded. Other initiatives included employees visiting customers to obtain their views on products and services. Further, to help improve transparency of life products and provision, Delta Lloyd simplified its cost structure and lowered the costs of life products. It also promotes transparency of life products on its website.
International and Morley
Aviva India has implemented various initiatives to help control mis-selling, from enforcing guidelines for policy sales, taking action against agents who do not comply and carrying out “mystery shopping” activities to monitor how policies are sold to carrying out independent customer satisfaction studies. Similarly, to avoid agent mis-selling in Aviva-COFCO China, we have training programmes in place that provide strict certification of agents across China.
During the year, Morley’s sustainable and responsible investment (SRI) team reached the £1 billion mark in its SRI funds under management. The SRI team, has seen continued growth from both retail and institutional channels since joining Morley in 2001.
We continue to be the only UK insurer included in both the Dow Jones Sustainability World and STOXX Indexes, and we are a member of the FTSE4Good Index series. These indices track the performance of the leading sustainability-driven companies worldwide. We are particularly proud of our scores for environmental reporting (100%), social reporting (98%) and code of conduct (97%) in the Dow Jones Sustainability World Index.
These listings recognise the commitment we are making to thinking about the future in a socially responsible way. It is apparent that investors are increasingly taking account of these ratings when making investment decisions.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
Environment
We are committed to a programme of management, continuous improvement and reporting of our direct and indirect environmental impacts.
As a forward thinking insurer we are making provision for the effects of climate change through adapting and creating new products and services to meet this challenge. We will work with others to understand better the implications of climate change and play our part in helping to develop and deliver society’s continuing response.
We are managing and reducing, where possible, our own CO2 output and encourage others to do the same, using our influence as an investor and purchaser. In 2006, our total CO2 emissions increased largely due to the inclusion of emissions data, for the first time, from the RAC and AutoWindscreen fleets and buildings, and our Asian businesses. From our existing businesses, emissions have shown a slight increase, reflecting more business travel related to operational requirements and the upgrading of our managed property portfolio in respect of air-conditioning. We will continue to focus on reducing our energy use and look to source zero emission power where we can. We will offset our remaining emissions on a retrospective basis starting with emissions generated in 2006. We will compensate for the carbon output of our consumption of non-renewable sourced electricity and gas from buildings and business travel, including air, car and train, across all of our global operations.
We are also looking at ways in which to help our customers reduce their own CO2 emissions through the provision of innovative products such as “Pay As You Drive™” and by offering reduced premium insurance for drivers of hybrid and flexi-fuel Ford cars.
Our general insurance operations have been seeking solutions to limit the effects of climate change on customers through its flood mapping and lobbying on the issue of flood defences and floodplain planning.
Suppliers
We regard our suppliers as our partners and work with them to help us achieve our policy aspirations in the delivery of our products and services.
In 2006, we revised our group purchasing policy. We include CSR in our supplier tendering process and in some of our businesses, require suppliers to sign up to a code of conduct.
CO2emissions
Community investment
1 Cash and gifts in kind
2 Staff time
3 Management time
Aviva is committed to becoming the first insurer to carbon neutralise its operations on a worldwide basis. This is an important further step in our efforts to limit our environmental impact, following our progress with energy efficiency and use of zero emission electricity. For example, 55% of electricity used by Aviva globally is obtained from zero emission sources.
We shall offset the remaining emissions – about 125,000 tonnes a year group-wide – on a retrospective basis, starting with 2006. We will achieve this by compensating for carbon output from our use of non-renewable sourced electricity and gas in buildings and business travel by investing in projects that generate carbon credits. The credits will come from carbon mitigation methods, such as tree planting, and renewable energy generation projects that do not release carbon to the atmosphere, such as solar or wind power.
Our decision to go carbon neutral is a significant step. We believe climate change to be the most important environmental issue facing the world. As a forward thinking company, we are playing our part in addressing this challenge and would encourage other businesses to follow suit.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
Community
We are committed to working in partnership with the communities in which we operate. In 2006, we invested £6.3 million in community initiatives worldwide. Our investment includes 34,000 hours of staff volunteering.
Our forward thinking approach is reflected in our support for numerous community initiatives around the group.
In September 2006, Aviva became one of the founding partners of Oxfam’s 365 Alliance. This unique alliance enables corporate donors to fund Oxfam’s initial response operations that will enable it to immediately deal with disasters whenever and wherever they occur around the world. This includes a global rapid response team of aid workers and the UK’s biggest warehouse with a stockpile of emergency supplies.
We supported two Breakthrough Breast Cancer walks in the UK to help raise money and awareness for this very worthy cause. Aviva Canada supported a similar event by hosting “pit stops” in seven Canadian cities during The Weekend to End Breast Cancer.
Looking ahead
Our business units have defined local challenges and relevant issues in their market environments. Across the group, we will continue to embed CSR and to identify suitable initiatives that will help to develop and progress this agenda.
In line with the spirit of our “Forward thinking” campaign, we supported two major events in 2006 with the shared vision of a future free from the fear of breast cancer.
In seven cities across Canada last summer, we were national sponsors of “The Weekend to End Breast Cancer”, which saw thousands of people take part in fundraising walks. We sponsored a “pit stop” in each city – designated places along the 60km course where walkers could rest briefly during their trek. The stops were staffed by Aviva volunteers, friends and family, and £27 million was raised in total by the event.
In the UK in September, we were title sponsor of the Aviva Weekend to Breakthrough Breast Cancer. In London and Birmingham, more than 2,000 walkers raised a total of £5.3 million from the two events. Our staff were among the hundreds of volunteers who gave their time to help with tents, serve meals and distribute water and goodie bags to the walkers.
It was very gratifying that so much money was raised by these events on both sides of the Atlantic to help fund research into ways of combating breast cancer.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
In India, we continue to build on our partnerships with leading development finance institutions. These institutions excel in the provision of micro-financial services to the underprivileged section of Indian society. To date we have covered over 650,000 lives in the social sector.
Morley’s socially responsible investment (SRI) team also supports micro-finance initiatives. It participated in the successful raising of $60 million from investors in the UK, Europe and the US to lend to micro-finance institutions (MFIs) for a period of five years. MFIs provide people with small collateral-free loans at reasonable interest rates. Specifically, Morley purchased a $1.5 million note for one of Norwich Union’s sustainable future funds, which helped create the foundation for the entire structure. This initiative will finance approximately 300,000 micro-loans in Latin America, eastern Europe and southeast Asia over the five year life of the structure.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr
Employees
Our relationship with our people
Aviva’s strategy and focus is changing. We know that fundamental to achieving our ambition to become the world’s most trusted savings, investment and insurance provider is keeping our promises to customers and employees. We need to become a truly customer and employee centric organisation. As a result, in 2006, we have developed a new people strategy that looks to the future, towards positioning us as a great brand for our customers and employees, in both our mature and developing markets. Our people strategy comprises five aims:
- To create a “leaderful” organisation, recognising the right of employee to be led by great leaders who excite their teams to exceptional performance in serving customers
- To move beyond succession planning to talent management, to maximise developmental and business rewards for the company and its people
- To internationalise Aviva, sharing and developing talent across our business units
- To measure our people assets, to understand our human capital and how it can be grown
- To build Aviva as a strong employment brand, clearly communicating what we stand for, so that we can draw talent into the organisation and deliver a great employee experience across the employment life cycle.
In each of our 32 business units around the world, this people strategy, along with our values and our human resources policies, drives and governs our interactions with our employees.
Our human resources policies govern our relationships with our people. The policies cover management development and training, reward, diversity, recruitment and health and safety. View these at www.aviva.com/csr.
In our annual global employee survey, we achieved further improvement in the measures of employee engagement and leadership.
Employee engagement +8% on prior year
Leadership +4% on prior year
Additionally, we are making progress against a global financial services benchmark
Employee engagement 3% below benchmark
Leadership 2% below benchmark
Our values
In everything that we do, we are mindful of our brand values. They inform not only what we do, but the manner in which we do it. Our values are set out below:
Progressiveness
Being progressive is having a vision of the future, encouraging innovation and improvement, and championing continuous learning. It is about leading the industry by listening and responding to customers and keeping ahead of the competition.
Integrity
Integrity is behaving in a way consistent with professional and ethical standards. It is being open, honest and keeping commitments, taking personal responsibility for what we say and do. It is about earning trust and respect through honesty and fairness.
Performance
Performance-driven is having clear goals and achieving them by everyone working towards them in an efficient manner.
Teamwork
Teamwork is the lifeblood of Aviva. It means commitment to a common vision and objectives, depending on one another, pulling together and sharing knowledge and learning. It is creating a sense of community and belonging in how we operate as a business. It means taking pride in Aviva’s achievements.
Leadership and talent
We want our employees, the external recruitment market and our shareholders to recognise us as an organisation that develops exceptional leaders. At Aviva, we passionately believe that all our people have talent. We aim to create an environment where our people can give their best, feel valued and be able to develop competitive skills for the future. While adopting this inclusive view of talent, we need to become more rigorous in differentiation, providing our people with development paths that are tailored to their particular needs. The cornerstone of this approach will be the development and implementation of a common framework across the group for describing talent in terms of past performance and the predictive indicators of potential. The focus for 2007 will be the implementation of the infrastructure, systems and capabilities to enable this.
The Aviva leadership academy (ALA) underpins our talent development strategy and delivers a range of highly sought after, world-class programmes in conjunction with renowned international business schools.
To emphasise the importance of great leadership, each of our business units is required to measure leadership performance. This performance, along with measurements of engagement and customer satisfaction, is a key element of determining senior manager bonuses across the group.
A global workforce serving our customers
We are an international business, with a hugely diverse range of customers. In 2006, we employed 59,000 people in 22 countries, with 65% of these people telling us through our global climate survey that “my business unit is a great place to work.”
A diverse workforce, meeting diverse customer needs
Our senior management population:
Total female 18%
Total male 82%
Total Aviva workforce:
Total female 49%
Total male 51%
To reflect our customer base, we continue our focus on diversity and on making our workforce increasingly international. In 2006, our global diversity steering group oversaw the implementation of a “respect” campaign promoting diversity best practice. The group also made a decision to sponsor networks for women and for lesbian, gay and bi-sexual employees. Plans are in place for 2007 to develop more networks, particularly to promote multi-cultural understanding, and to introduce targets for the number of international assignments in place around the business.
External surveys and monitoring organisations provide us with an opportunity to measure our progress in embracing diversity. Recognition in 2006 included the Opportunity Now “City” award, appearance in The Times’ “Top 50 places where women want to work,” an Opportunity Now Gold award (an improvement on 2004 and 2005’s bronze and silver ratings) and a silver award from Race for Opportunity.
In the UK, to maintain Norwich Union’s position as a highly efficient and effective company, and to respond to changing customer buying habits, a planned UK headcount reduction of 4,000 by 2008 was announced in 2006. Part of this reduction relates to duplication of roles in functional areas such as marketing, human resources, finance and information technology due to the bringing together of the Norwich Union Life and general insurance business. The remainder relates to increasing the number of roles (in line with plans announced in 2005) in the Indian and Sri Lankan operations that currently support Norwich Union and Aviva Canada customers. Reinforcing the importance of our brand values and of how we interact with our customers, we will be transferring more than 5,000 employees of third-party suppliers in India and Sri Lanka into our own offshore division, Aviva Global Services during the course of 2007.
We are seeking to minimise the number of compulsory redundancies from this restructuring through voluntary turnover and redeployment. In addition, we are supporting those who may be facing redundancy by offering consultancy, out placement, financial planning services and job search assistance.
Looking ahead
In 2007, we will be undertaking specific projects towards the goals articulated in our people strategy, including embedding a methodology for accounting for our human capital in the group’s performance management system and in its external reporting.
We believe in the talent of our employees and we aim to create an environment where they can give their best, feel valued and develop their skills. The Aviva leadership academy is an integral part of our talent management strategy and plays a key role in building and retaining leaders. The academy programmes emphasise experiential learning, networking and the development of everyday authentic leadership skills. The programmes are progressive and reflect the changing needs of our employees as they move through the organisation.
We are a leading member company of the Centre For Executive Development (Cedep) located in Fontainbleu, France and work in conjunction with this organisation and leading international business schools including Columbia Business School, The Centre for Creative Leadership, Wharton, INSEAD and Yale to design and develop cutting-edge programmes that respond to our changing environment.
See other examples of forward thinking in action
For more information on our CSR programmes visit www.aviva.com/csr