AvivaSep 24 2021

Aviva to launch ESG tool on platform

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Aviva to launch ESG tool on platform

Aviva is to launch an ESG reporting tool on its platform, which will allow advisers to assess their assets in relation to a variety of themes, including gender diversity. 

The tool, which will be launched in the second half of October, aims to allow advisers to objectively assess a client's portfolio against six ESG themes, including climate change and board gender diversity.

Mike Hogg, head of platform propositions at Aviva, told FTAdviser he hopes the tool will cut through the “blizzard” of information around sustainable investing.

He said: “ESG is going to shake the foundations of the investment industry, it’s becoming the third key dimension of funds selection,” adding the issue was important to Aviva in light of its commitment to be carbon zero by 2040.

“What we’ve seen in this country is a blizzard of claims about ESG,” he added, highlighting how advisers were all aware that sustainable regulation is going to be tightened in the UK.

“Advisers understand [regulation] is coming, they know they have to do something and they want to know whether these funds deliver.

“So what we’re trying to do is to try and cut through all of that. Customers rarely come and say 'I want ESG investments', they’ll say 'I’m worried about climate change'.  

“I think that’s been the challenge for advisers - how to distill all this noise into a practical action for customers.”

The tool is being launched ahead of the expected introduction of climate change disclosure regulations in the UK.

The EU implemented its own sustainability disclosure regulations, SFDR, earlier this year and the UK is looking to do the same. 

Hogg reckons the UK’s regulation will mirror that of the EU, which many asset and fund managers are already familiar with.

He added: “We think this is crucial for customers to hold advisers, fund managers, and everyone else to account to make sure that we’re actually delivering the change that everyone wants to see.”

ESG toolkit

The tool will use the data held on Aviva’s platform to drill down into the underlying holdings in a client’s portfolio, and measure their credentials using disclosure data.

This is then compared with data feeds from MSCI and Sustainalytics.

Holdings are rated red for below par, orange, or green if they are exceeding certain criteria. 

“[The tool] marries the two [sets of data] and so a client can see whether the underlying investments in a fund or DFM portfolio are actually delivering against what they want,” Hogg said.

When asked whether any other platform offered this service, Hogg said not to his knowledge.

“I’m sure that others will have that kind of capability, but we’re not aware of anyone [with a similar tool] at the moment,” he said.

He added data collection was still difficult, with equities the easiest holdings to find data on. 

“Cash is quite difficult for obvious reasons, commercial property is also hard, as well as sovereign debt - there’s not a lot of data around that.”

He hopes the tool will highlight the areas in which more data needs to be collected to give investors a 'holistic' view of the impact of their portfolio.

Independent ratings

Colin Watling, a senior strategic change manager at Aviva who demonstrated the tool to FTAdviser, said the firm had decided not to set what the ratings should be.

“Everything has been decided on independent rationale and data,” he said.

“So we’ve not decided what’s ‘red’ or ‘green’, we’ve used independent rationale to do that. We encourage the reading of that information, and then [the adviser] would need to set the client’s preferences.”

The themes that are measured are climate change, waste, water, security, women in leadership, deforestation and human rights.