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.

Arctic Drilling

The definition of Arctic is geographical and includes oil production activities north of the 66.5 latitude. This includes offshore or onshore oil production.

Aviva Master Trust

This is a contribution, occupational pension scheme which is set up under trust.

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

The amount of carbon released is offset by a reduction in emissions or a removal of carbon. These carbon savings could come in the form of carbon credits that do not represent removals of carbon from the atmosphere, but instead emissions that have been reduced from a business as usual baseline. These types of carbon credits are not technically ‘removals’ which they would need to be to conform with the Intergovernmental Panel Climate Change definition.

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 technology based solutions such as carbon capture and storage from an industrial process or direct air capture.

Climate crisis

This is a term describing global warming and climate change, and their consequences. The term has been used to describe the threat of global warming to the planet, and to urge aggressive climate change mitigation.

Climate transition plan

A climate transition plan sets out how an organisation will transition its business to the low carbon economy, aligning its operations, assets, portfolio, and business model to meet Net Zero. The plans should include actions and targets to meet Net Zero commitments. The requirement to publish transition plans has been included in the TCFD guidance and adoption encouraged by 2023.

Climate Value-at-Risk (Climate VaR)

This measure assesses the potential financial impacts of future climate-related risks and opportunities in different IPCC scenarios and in a blended aggregate scenario. The output provides an indication of the resilience of our strategy as a result of climate change and the transition to a low carbon economy.


The 26th UN Climate Change Conference of the Parties was held in Glasgow in November 2021. The COP26 summit brought parties together to accelerate action towards the goals of the Paris Agreement and the UN Framework Convention on Climate Change. COP27 will be held in Egypt in November 2022.


Stands for carbon dioxide (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 AGMs.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 ESG standards.

Environmental, Social, and Governance (ESG)

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 defaults and choices

Making it easy for retail investors to choose ESG investments. Where an investment vehicle uses default funds, such as workplace pension solutions, 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.

EU Taxonomy

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.

Exclusion Baselines

Baseline Exclusions are exclusions to investment or underwriting set by Aviva. Climate change exclusion baselines specifically focus on Thermal Coal, Arctic Oil, and Oil (tar) Sands – please see the policies for the information on revenue thresholds.

Green assets

Aviva defines green assets as Low carbon infrastructure debt & equity; such as Solar photovoltaics (PV), offshore & onshore wind, new energy centres reducing users’ demand for energy, waste to energy, green hydrogen generation, battery storage, low carbon public transport & electric vehicle charging infrastructure and energy efficient buildings. Green bonds: that meet Climate Bonds Initiative’s requirements, Social bonds and Sustainability bonds, as well as Green Gilts, Green loans and the Aviva Investors Climate Transition fund range. To determine the scope of our green assets, we have used “our and our customers assets” this includes all shareholder, with-profits and unit linked assets but excludes Aviva Investors third party client mandates.

Inertial Trajectory

Inertial trajectory show the evolution of portfolio emissions if the company takes no additional climate action above and beyond considering public pledges from policyholders, investees and announced regulatory changes.

Intergovernmental Panel on Climate Change (IPCC)

This Is the United Nations body for assessing the science related to climate change.

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.

International Sustainability Standards Board (ISSB)

Proposed body being established by the International Financial Reporting Standards Board Foundation (IFRS) to develop global sustainability reporting standards. The ISSB will consolidate the Climate Disclosures Standards Board and the Value Reporting Foundation, which houses the SASB Standards by June 2022.

Just Transition

The Just Transition focusses on the transition away from high-carbon activities into the green economy with its principles covering; support for workers in the transition to new jobs, supply chain considerations, economic strategies and Paris Agreement reporting. A declaration on “Supporting the Conditions for a Just Transition Internationally” was agreed at COP26 by a number of countries. 

Paris Agreement target

This is a 1.5°C target set by the global Paris climate change deal in 2015 to limit the damage wreaked by acute events such as extreme weather and chronic events such as sea level rise.

Powering Past Coal Alliance

The UK and Canadian Government created a national commitment for countries to ‘Power Past Coal’ which was launched at the UN Climate Change Conference (COP23) in 2017. We were a founding member of the Financial Principles committing to cease supporting thermal coal power investments and underwriting by 2030.

Nature-based Solutions

Nature-based solutions for climate harness the power of nature to reduce greenhouse gas emissions and help to adapt to the impacts of climate change. These solutions involve protecting, restoring and sustainably managing ecosystems to address society’s challenges and promote human well-being. Forests, peatlands, wetlands and mangroves are some examples of nature-based solutions. 

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 company

This target covers all material ‘Scopes 1, 2 and 3’ carbon emissions (including investment, operations, supply chain); we are also developing a methodology for Net Zero underwriting.

Net Zero target

An organisation's targets 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 by offsetting through carbon removals.

Net Zero Asset Owner Alliance

A United Nations convened group of institutional investors who have committed to transitioning their investment portfolios to net-zero greenhouse gas emissions by 2050.

Non-Fossil Fuel Project Finance Bond

Project bonds are issued to finance a specific project and the bond proceeds are paid exclusively from the cash flow generated by that project. A Non-Fossil Fuel Project Bond relates to a real assets project that does not involve activities relating to fossil fuels.

Oil Sands

Oil Sands (also know as Tar Sands) is viscous crude oil (or bitumen) and/or associated fossil fuel derivatives that are trapped in sandstone.


Aviva’s Stop List represents a list of Excluded Issuers, securities or countries which the business may not be permitted to deal in.

Sustainability Accounting Standards Board (SASB)

An ESG guidance framework that sets standards for companies to report against industry specific guidance for financially material sustainability information. SASB will be consolidated into ISSB in 2022.

Sustainability Disclosure Requirements (SDR)

The UK Government announced SDR at COP26 for pension funds, investment products and companies to report under. The requirements build on the foundations of the TCFD four pillars; Governance, Strategy, Risk Management, and Metrics and Targets. Certain companies will be required to disclose their Green Taxonomy-aligned activities and progress against their climate transition plans.

Science Based Targets Initiative (SBTi)

The SBTi is a collaboration between United Nations Global Compact, CDP, World Resources Institute and WWF. It supports companies to set emission reduction targets in line with the decarbonisation required to limit global temperature increases to 1.5°C.

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 published 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 Development Goals (SDGs)

These 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.

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.

Task Force on Climate-related Financial Disclosures (TCFD)

The Financial Stability Board created the TCFD to improve and increase reporting of climate-related financial decision useful 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.

Task Force on Nature-related Financial Disclosures (TNFD)

The Financial Stability Board created the TNFD to develop a risk management disclosure framework to enable decision useful nature-related reporting. The TNFD will build upon the structure and foundation of the TCFD. The TNFD was announced in 2020 and its requirements are under development.

Thermal Coal

Thermal Coal includes lignite, bituminous, anthracite and steam coal, and excludes revenue from metallurgical coal.

UK Green Taxonomy

A framework being drawn up by the UK Government which sets out the criteria which specific economic activities must meet to be considered environmentally sustainable. Certain companies will be required to disclose the percentage of their capital expenditure, operational expenditure and turnover that relates to UK Green Taxonomy aligned activities. The climate change criteria are subject to consultation in 2022.Unconventional fossil fuels. There are typically four types of unconventional fossil fuel: oil sands, shale oil & gas, deepwater oil and arctic drilling.

Vector-borne diseases

Vector-borne diseases are human illnesses caused by parasites, viruses and bacteria that are transmitted by vectors.

Scope of Aviva investment 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*; including both active and passive funds);

3. Ownership scope: to cover all shareholder assets and those policyholder assets where we have decision making control**

Where we don’t have decision making control, we will engage with the decision-makers (for example trustees of pension funds) to advocate adopting our climate change approach or committing to equivalent climate action.

* 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.  In these cases, we will engage with the decision-makers to advocate adopting our climate approach or ask them to sign up to similar carbon reduction goals.