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.

Absolute Carbon Emissions

Absolute emissions is the total amount of emissions that a business has created in a set period of time.


Climate change adaptation is the process of altering behaviour, systems, and communities to protect the environment, society and the economy from the impacts of climate change.

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.


Anything of value owned by a business that can be set against its liabilities. Assets are usually divided into four types: fixed assets (typically land, buildings and machines); current assets (cash, stock, investments, work in progress and payments owing); liquid assets (cash or funds held in a form that can be quickly converted into cash); and intangible assets (goodwill, trademarks, patents, etc).

Aviva Master Trust

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

Aviva’s Sustainability Ambition

Our sustainability ambition, which sets out our commitment to create a brighter future. This is focused on three core areas – acting on climate change, building stronger, more resilient communities and embedding sustainability in our business.


The variety of animals, plants, fungi and microorganisms like bacteria that make up our natural world. Each species within an ecosystem, such as a rainforest, play a role in maintaining balance and supporting life.

Blue Carbon

Carbon captured and stored in coastal and or marine ecosystems.

Carbon Credits  

Carbon Credits work like permits which enable companies to produce emissions equivalent to the carbon that is removed from the atmosphere by projects that improve the atmosphere such as afforestation.
Carbon Credits that are acquired by businesses need to be of a high standard. One example of this is The Woodland Carbon Code (WCC),  is the UK’s government-led, voluntary carbon standard for woodland creation projects.

Carbon intensity

The carbon intensity of a firm is calculated by dividing the carbon emissions of the firm by its revenues, square footage of buildings, number of employees etc. In the context of financial services, this can also be used to calculate the carbon intensity of a portfolio of securities.

  • Economic carbon intensity (ECI): Attributed (finance) absolute greenhouse gas emissions (tCO2e) divided by Aviva’s in-scope assets in USD millions (relevant for all asset classes).
  • Weighted average carbon intensity (WACI) revenue: Weighted average of investee company carbon intensity by revenue, i.e. greenhouse gas emissions (tCO2e) divided by revenue of investee company in USD millions, where the weight reflects investment weight in the relevant portfolio.

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 reduction

The process of reducing carbon / greenhouse gas emissions through improving business processes and finding efficiencies. This is seen as preferable to carbon offset as it means that less carbon is generated, reducing the need to offset emissions.

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 Action 100+

Climate Action 100+ is an investor-led initiative to ensure the world’s largest corporate greenhouse gas emitters take necessary action on climate change.

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 funds

Investment funds which aim to deliver growth by investing in companies that either provide solutions to climate change or orientate their business models to a low-carbon economy, while avoiding the most carbon intense fossil fuel-based companies.

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)

Aviva has developed a Climate VaR measure which enables assessment of the financial impacts of future climate-related risk and opportunities. The metric has been developed through an inter-disciplinary team which was created with representation from across the business. An expert panel reviews and challenges the main assumptions made in the selection, development and modelling of the financial impacts across scenarios.

Community investment

The gross monetary amount from Aviva Group in support of community organisations/projects/cause, including: Voluntary activities, beyond our core business activities and our legal obligations, that contribute to the economic, social and environmental sustainability of our communities. All charitable spend, management costs, value of gifts in kind and the cost of volunteering in alignment with the Business for societal impact (B4SI). B4SI benchmark is a framework used by corporates to calculate their community investment spending.


COP stands for “Conference of the Parties”. A COP is the main decision-making body around a particular issue such as  Climate Change or Biodiversity. For example; Climate Change is governed by the United Nations Framework Convention on Climate Change (UNFCCC).   A COP meets annually to assess the effects of measures it has implemented. Key recent examples below:

  • COP15 - The 15th meeting of the Conference of the Parties (COP) to the Convention on Biological Diversity (CBD) was held in Montreal in December 2022. It achieved the adoption and implementation of a “Post 2020 Global Biodiversity Framework” (GBF), a roadmap of what countries need to do to reverse nature loss.
  • COP26 - 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.


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.


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.

Dormant Assets

Funds held within financial services products which have not been accessed for a certain period of time, and attempts to trace their owners to reunite them with their money have been unsuccessful. Find out more about Aviva’s Dormant Assets scheme here.

Emissions (carbon)

A type of carbon (such as carbon dioxide) released into the atmosphere, often through human activity such as the burning of fossil fuels such as coal or gas.

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.

FCA’s Sustainability Disclosure requirements

A package of measures aimed at clamping down on greenwashing. This includes sustainable investment labels, disclosure requirements and restrictions on the use of sustainability-related terms in product naming and marketing.

Financed Emissions

Our financed emissions metric covers the greenhouse gas emissions which Aviva finance through its investments under Scope 3 Category 15 of the GHG Protocol, for in-scope asset classes.

Finance for Biodiversity Foundation Pledge

A group of financial institutions calling on global leaders to protect and restore biodiversity through their finance activities and investments.

Financial Sector Deforestation Action Initiative (FSDA)

A results-driven collaborative of financial institutions that unites members around a shared approach to tackling deforestation and creating essential cooperation across other climate and nature-related initiatives.

Glasgow Financial Alliance for Net Zero (GFANZ)

The world’s largest coalition of financial institutions committed to transitioning the global economy to net-zero, launched in April 2021. GFANZ lists 2 key purposes: to expand the number of net zero-committed financial institutions and to establish a forum for addressing sector-wide challenges, helping to ensure high levels of ambition are met with credible action.

Global Biodiversity Framework (GBF)

A framework aiming to address biodiversity loss, restore ecosystems and protect indigenous rights. The plan includes concrete measures to halt and reverse nature loss, including protecting 30 per cent of the planet and 30 per cent of degraded ecosystems by 2030.

Good Business Charter

An accreditation which UK organisations can sign up to in recognition of 10 responsible business practices. All 10 commitments must be met to receive accreditation.

Greenhouse Gas Protocol

A comprehensive, global, standardized framework to measure and manage greenhouse gas emissions from private and public sector operations and climate change reduction activities.

IIGCC - The Institutional Investors Group on Climate Change

A European body for investor collaboration to support and enable the investment community in driving significant and real progress by 2030 towards a net zero and resilient future. To be achieved through capital allocation decisions, stewardship and successful engagement with companies, policy makers and fellow investors.

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.

Independent Assurance or Assurance

An independent review of sustainability claims and reports to ensure that they meet governance goals and can be relied upon to be accurate.

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.

Intergovernmental Science-Policy Platform on Biodiversity and Ecosystem Services (IPBES)

An independent intergovernmental body established to strengthen scientific policies for the conservation and sustainable use of biodiversity, human well-being and sustainable development.

International Sustainability Standards Board (ISSB)

A board delivering a comprehensive global baseline of sustainability-related disclosure standards that provide investors and other capital market participants with information about companies’ sustainability-related risks and opportunities to help them make informed decisions.

Investment in sustainable assets

Our investment in sustainable assets is made up of four sub-categories: green assets, sustainability assets, social bonds and transition & climate-related funds.

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.

Low Carbon Economy

A low-carbon economy (sometimes referred to as a decarbonised economy) is based on energy sources that produce low GHG emissions.

Low Carbon infrastructure

Infrastructure such as transport systems or buildings that produce lower carbon emissions than traditional infrastructure and uses renewable energy such as solar and wind.


Climate change mitigation means avoiding and reducing GHG emissions to try and reduce the impacts of climate change.

Natural Capital Transition Global Equity Fund

Investment fund which aims to deliver long-term capital growth by investing in companies globally that either provide solutions to reduce biodiversity loss or are transitioning their business models to manage their impact on nature, while avoiding those that do not meet minimum environmental criteria.

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

The process of achieving zero impact on the environment by balancing the amount of carbon emissions produced against schemes and projects that remove carbon from the atmosphere, such as nature-based solutions and or carbon offsetting.

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 reach 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 (NZAOA)

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

Net Zero Insurance Alliance (NZIA)

A group of 30 leading insurers and reinsurers that have committed to transition their insurance and reinsurance underwriting portfolios to net-zero greenhouse gas (GHG) 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 known as Tar Sands) is viscous crude oil (or bitumen) and/or associated fossil fuel derivatives that are trapped in sandstone.

Operational carbon emissions – absolute

Absolute CO2e data includes emissions from our buildings, business travel, water and waste to landfill as generated during the year.

Operational carbon emissions – relative

Relative CO2e data is the comparison using the year reported and the adjusted data for the previous year encompassing structural changes, and material changes to emission factors that have occurred.

Operational scope 2 emissions

The total quantity of indirect GHG emissions from purchased energy (Scope 2). Scope 2 emissions cover emissions generated from the electricity used in all the buildings the Group operates, as calculated by the location-based and market-based methodology.
Location based - Operational emissions from non-owned sources (i.e., power plants) using an average emissions intensity for the grids on which energy consumption occurs. This includes purchased electricity, municipal heating and cooling.
Market based - Operational emissions where we have contractual arrangements for renewable electricity, e.g. through our own on-site generation, certified renewable electricity through a supplier tariff or the separate purchase of renewable energy guarantees of origin (REGOs) or market equivalent, or consumed renewable heat or transport certified through a Government scheme.

Operational scope 3 emissions

The total quantity of indirect emissions (not included in Scope 1 & 2) that occur in the value chain including both upstream and downstream emissions (Scope 3). Scope 3 emissions cover operational emissions from business travel (air, rail, grey fleet, and rental cars), water, waste, electricity transmission and distribution, and homeworking.

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.

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).

Social Transition Global Equity Fund

Investment fund which aims to deliver long-term capital growth by investing in companies globally that either provide solutions to social inequality or are transitioning their business models to manage their social impact, while avoiding those that do not meet minimum social criteria.


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.


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


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”.

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 was 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.

Sustainability risk

Sustainability risk means being able to meet the economic needs of the business without compromising society or the environment in the long-term.

Sustainability report

A report providing a summary of a businesses’ Environmental, Social, and Governance (ESG) goals and their performance against those goals in a financial year. Sustainability reports are increasingly released with the same detail and frequency as financial reports. Find Aviva’s Sustainability reports here.

Sustainable Assets

Our investment in sustainable assets is made up of four sub-categories:

  1. Green assets
    1. Infrastructure assets (direct and debt) - Energy, Transport, Water (including nature-related solutions), Waste, Land Use categories identified as eligible under CBI green bond database methodology (2022) – this includes green energy such as solar electricity, offshore and onshore wind.
    2. Real estate (direct and debt) - Categories defined as eligible under CBI green bond database methodology (2022). This category includes properties with EPC ratings of A and above as well as BREEAM of excellent and outstanding.
    3. Bonds and loans - In CBI green bond database and benefits from an external review.
  2. Social bonds
    1. Bonds and loans - Tagged social in CBI social and sustainability bond database and benefits from an external review.
  3. Sustainability assets
    1. Infrastructure assets (direct and debt) Non-electrified passenger rail and ICE-powered urban public transport.
    2. Bonds and loans. Tagged sustainability in CBI social & sustainability bond database (which includes sustainability and sustainability-linked bonds) and benefits from an external review3. Sustainability linked loans which meet the Sustainability-Linked Loan Principles (SLLP) from the Loan Market Association (LMA) and benefits from an external review3
  4. Transition & climate-related funds. See the table below for more detail on the sustainable asset definition.
    1. Funds - Climate transition funds, Social transition fund, Natural capital transition fund, Climate/decarbonisation venture capital funds.

Sustainable Bonds

Bonds are issues where proceeds are used to finance or re-finance a combination of green and social projects or activities.

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 Finance

Sustainable finance takes the environmental, social and governance (ESG) impacts into account when making investment decisions. This means that more long-term investments are made in sustainable economic activities and projects. Find out more about Aviva’s approach to Sustainable Finance here.

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 made 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.

Temperature alignment

The temperature alignment metric assesses Aviva’s temperature alignment with the Paris Agreement target of limiting global warming to well below 2°C, preferably to 1.5°C above pre-industrial levels, in respect of our investments. Implied Temperature Rise (ITR), Portfolio Warming Potential (PWP) and internal analysis are used to calculate an overall temperature alignment score.

Thermal Coal

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

Transition Pathway Initiative

An independent, authoritative source of research and data into the progress being made by the financial and corporate world in making the transition to a low-carbon economy.

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.


The process of selecting which risks an insurance company can cover and deciding the premiums and terms of acceptance. On the stock exchange, an arrangement by which a company is guaranteed that an issue of shares will raise a given amount of money, because the underwriters promise to buy any of the issue not taken up by the public.

Vector-borne diseases

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

Woodland Carbon Code

The Woodland Carbon Code (WCC) is the quality assurance standard for woodland creation projects in the UK, and generates high integrity, independently verified carbon units. Backed by the Government, the forest industry and carbon market experts.

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.