Aviva’s climate goals – glossary and definitions

We have made every effort to keep our website free of jargon, but realise that some expressions might need further explanation. This glossary is intended to help you understand some of the terms used in the insurance, investment and financial services business.

Carbon intensity

In the context of financial services services, the carbon intensity of a firm is calculated by dividing the carbon emissions of the firm by its revenues. This can then be used to calculate the carbon intensity of a portfolio of securities. Rating agencies such as MSCI use them as a way of comparing companies in the same sector. Regulators request companies to disclose their carbon intensity using a financial metric and a non financial metric.

Carbon neutral

This is achieved by offsetting your carbon emissions. This is easier to achieve than ‘net zero’ as it allows a company to pay someone else to emit less carbon on your behalf (known as an offset). In contrast, Net Zero mean no additional carbon going into the atmosphere; any residual amounts emitted must be matched by removing the same amount of carbon out of the air.

Carbon removal

The process of removing carbon dioxide from the atmosphere and locking it away for decades, centuries, or millennia. This could slow, limit, or even reverse climate change. Examples include nature based solutions such as reforestation or capturing and sequestering carbon from biofuel or technology based solutions such as carbon capture and storage from an industrial process or direct air capture.

Community Investment

Community Investment includes cash donations, project costs (marketing and communications), donations in kind such as the cost of volunteering. Our community investment data is assured by PwC and reported annually in the Annual Report and Accounts.


The 26th UN Climate Change Conference of the Parties will be held in Glasgow in November 2021. The COP26 summit will bring parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change.


Stands for CO2 equivalent. There are a number of greenhouse gases which warm the earth at different intensity levels such as water vapour, carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrochlorofluorocarbons (HCFCs), ozone (O3), hydrofluorocarbons (HFCs),and perfluorocarbons (PFCs). Rather than providing metrics for each gas they are converted into CO2e for reporting.

Engage and divest

Engagement is where shareholders seek to influence firm behaviour through direct engagement, filing shareholder proposals and voting at Annual General Meetings (AGM). Divestment is where shareholders sell a firms’ shares, typically because engagement has failed to influence the firm’s behaviour or the firm does not meet the investor’s minimum environmental, social and governance ESG standards.


A term typically used in an investment context to denote the non-financial aspects of a company’s performance that are key contributors to its bottom line. Environmental (e.g. pollution), Social (e.g. labour standards) and Governance (e.g. board diversity and accountability) are the three factors commonly used to measure the sustainability and social impact of a firm.

ESG investments

Investors can use investment strategies incorporating ESG criteria to identify and evaluate companies responses to issues which can prompt engagement, voting and potential divestment where it is considered the it could impair future financial performance.

ESG defaults and choices

Making it easy for retail investors to choose ESG investments. Where an investment vehicle uses default funds, such as workplace pensions, these funds are ESG based.

Ethical investments

Ethical investing refers to the practice of using one’s ethical principles as the primary filter for the selection of securities investing. Ethical investing depends on an investor’s views. Ethical investing gives the individual the power to allocate capital toward companies whose practices and values align with their personal beliefs. Choosing an investment based on ethical preferences is not indicative of the investment’s performance.


Greenhouse gases. Those gases that absorb and emit energy, so causing the greenhouse effect (see CO2e)

Green assets

Globally, there are a number of competing definitions of green assets.  Aviva defines green assets as:

  • Low carbon infrastructure debt and equity e.g. solar PV, offshore and onshore wind, waste to energy, green hydrogen generation, battery storage, low carbon public transport and electric vehicle charging infrastructure, and energy-efficient buildings
  • Green loans and green bonds (must meet Climate Bond Initiative [CBI] requirements). Social bonds and Sustainability bonds are included. Sustainable Development Goal (SDG)-linked bonds and transition bonds are excluded
  • Aviva’s investments in specific climate-related funds, including Aviva Investors Climate Transition Funds and similar funds from external asset managers

Green finance

Any financial instrument or investment – including equity, debt, derivative-issued to finance projects and activities that deliver positive environmental benefits. 

Impact investing

A subset of ESG investing. An investment strategy whereby an investor proactively seeks to place capital in businesses that can generate financial returns as well as intentional and measurable social and / or environmental goals.

Negative emissions technologies

Technologies that enable carbon to be removed from the atmosphere e.g. machines that capture carbon dioxide from the air and sequester it.

Net Zero target

A firm commits to make Net Zero carbon emissions by a specific date, at which point having sought to reduce the emissions as much as possible, any carbon dioxide which continues to be released into the atmosphere is balanced by an equivalent amount being removed through carbon removals. Offsets, reductions and avoided emissions do not count toward Net Zero.


The Paris Agreement is a legally binding international treaty on climate change adopted at COP21 in Paris in 2015. Its goal is to limit global warming to well below 2, preferably to 1.5 degrees Celsius, compared to pre-industrial levels.


Science Based Targets initiative is a collaboration between United Nations Global Compact, CDP (a global disclosure system), World Resources Institute and World Wide Fund for Nature. This initiative is highly respected and defines and promotes best practice in science-based target pathway setting. Offering a range of target-setting resources and guidance to set science aligned targets for operations, supply chain and more recently investments, the SBTi independently assesses and approves companies’ targets in line with its strict criteria.

Scope 1, 2 and 3 emissions

Greenhouse gas emissions are categorised into three groups or ‘Scopes’. Scope 1 covers direct emissions e.g. use of natural gas, company car vehicle emissions. Scope 2 covers indirect emissions from the generation of purchased electricity, steam and heating. Scope 3 includes 15 other categories of indirect emissions in a company’s value chain e.g. business travel and investments.

Social infrastructure

The construction and maintenance of facilities that support social services such as healthcare (hospitals), education (schools and universities), public facilities (community housing and prisons) and transportation (railways and roads).


The UK Stewardship Code 2020 defines stewardship as “the responsible allocation, management and oversight of capital to create long-term value for clients and beneficiaries leading to sustainable benefits for the economy, the environment and society.” Aviva UK Life is currently creating a stewardship statement which takes into account the 12 principles of the FRC Stewardship Code.


All activity that can be considered as taking account of profit, people and the planet (also known as the ‘triple bottom line’). A more formal definition is “meeting the needs of the present without compromising the ability of future generations to meet their needs”.

Sustainable impact and Net Zero aligned funds

Net Zero aligned funds are investments that are aligned with Net-Zero emissions by 2050 or sooner. Sustainable impact funds are broader and are investments that aim to deliver positive ESG outcomes.


The Financial Stability Board created the Task Force on Climate-related Financial Disclosures (TCFD) to improve and increase reporting of climate-related financial decision making information. Governments are encouraging firms to make disclosures aligned to the TCFD framework to enable investors to compare them and allocate capital accordingly. The UK Government is making TCFD reporting mandatory for all listed companies and large asset owners in 2022.


Planning for the transition to a low carbon economy. This includes planning for the social changes that result from the impact policy, technology, market, and reputational changes e.g. reskilling employees to move from high carbon sectors to low carbon ones.

UN-convened Net Zero Asset Owner Alliance

A United Nations convened group of 33 institutional investors who have committed to transitioning their investment portfolios to Net Zero GHG emissions by 2050.

Unconventional fossil fuels

There are typically four types of unconventional fossil fuel: oil sands, shale oil & gas, deepwater oil and arctic drilling.

United Nations Sustainable Development Goals (SDGs)

The Sustainable Development Goals are 17 global goals designed to be a “blueprint to achieve a better and more sustainable future for all”. They were set in 2015 by the United Nations and are meant to be achieved by 2030. Many firms use them to orient their sustainability action.

1.5 degrees

Refers to the Paris agreement goal to limit global warming preferably to 1.5 degrees Celsius, compared to pre-industrial levels (see Paris definition above)

Scope of Aviva climate targets:

  1. Business scope: given the long term nature of these targets we will focus on Aviva’s strategic core businesses (UK, Ireland, Canada, Aviva Investors), while continuing to report on other material markets while they remain under our control.
  2. Investment scope:  all main asset classes (i.e. credit, equities, direct real estate, sovereigns when methodology developed this year*); We will be able to expand this coverage further as data and methodologies become available; as well as extending to both active and passive funds.
  3. Ownership scope: to cover all shareholder assets and those policyholder assets where we have decision making control and data.**  Where we don’t have decision making control, we will engage and explain our climate change approach to the decision-makers and invite them to join us.

* sovereign bonds are not currently included in the Net Zero Asset Owner Alliance methodology, but we intend to include them within the methodology that is being planned for late 2021.  It may involve a different measure than carbon intensity.

** those policyholder funds where we don’t have control are not currently included in scope, notably Trustee Pensions, Third Party Funds on our platforms, AI third party mandates and any funds where we do not have carbon emissions data.