Aviva launches ESG Profiling tool on Adviser Platform

Aviva has today announced the launch of an ESG Profiling tool (ESG Profiler)¹ on its adviser platform, enabling independently verifiable assessment of a client’s holdings against six key ESG preferences.

The ESG Profiler, which is openly available via the platform, uses data sourced from MSCI and other ESG data providers to measure and review the holdings, where data is available, against six ESG preferences. Ratings are then totalled up to fund level and, at a higher level, the whole of a client’s portfolio can be assigned an ESG rating.

The preferences currently available are Climate Change (measured in CO2 weight); Waste (kg); Water Security (ltrs); Women in Leadership (% women on boards); Deforestation (involvement) and Human Rights (involvement). As more data becomes available, further preferences will be added to reflect the ambitions of the UN’s 17 Sustainable Goals.

ESG Profiler also provides a potential safeguard against greenwashing, which research has shown is a major adviser concern.² By assessing a fund’s ESG credentials, advisers can demonstrate to clients, backed up by quantifable and independent measures, how they are currently performing against the 6 key ESG preferences.

Mike Hogg, Head of Platform Proposition at Aviva, said, “ESG is becoming the third key dimension of fund selection, after price and performance. There is a proliferation of information in the market, almost to a bewildering degree. This tool was designed to cut through the noise and provide an objective assessment of the assets in a client’s portfolio, allowing them to decide on what action they want to take to meet their investment aims in line with values that are important to them.

“Where people invest their money can have a much larger impact on their carbon footprint than most realise – research we carried out with Make My Money Matter (MMMM) shows that switching a pension to a sustainable one has 21x more impact than becoming vegetarian, stopping flying and switching to a sustainable energy provider – combined.³ As a first step towards enabling customers to use their investments in this way, there needs to be a clear understanding of how investments are currently performing against selected targets.”

Whilst currently ESG Profiler is only available on Aviva’s adviser platform, there are plans to roll it out more widely across other platforms, as well as to continue to add to functionality in response to user feedback.

“Given the urgency to take action, it is really important for us to launch the tool so that advisers and their clients can start to benefit from the insight it gives as soon as possible,” adds Mike. “We’ll then take feedback from advisers on how to refine it and where to take it next. High on our list is to extend the number of ESG preferences and allow advisers to play out ‘what if?’ scenarios to understand the impact of changing portfolio holdings.”

The capabilities offered by the ESG Profiling tool also align with the objectives outlined in the Government’s recent paper, Greening Finance; A Roadmap to Sustainable Investing⁴ . This outlines the steps the Government has set out for the finance sector to help customers make financial decisions which align with their values. Mike adds; “ESG Profiler will help us move towards achieving Phase 1 of this roadmap and lay important foundations for Phases 2 and 3. For instance, we are looking at how we can align or add preferences to the Green Taxonomy, described in the Government paper.

“Aviva has targeted Net Zero carbon by 2040. We want to help our customers too, in their ambitions to reduce carbon by harnessing the power of their investments. Rigorous, open and transparent ESG assessment is vital to this."

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_{¹ FNZ Impact (The tool) provides information on a client's current portfolio for certain specific ESG themes. The information doesn't show whether the fund that a client invests in has any specific ESG aims or whether it employs a particular ESG strategy to achieve its aims. In addition, UK market has no defined criteria for the assessment of ESG factors currently and there are still some market wide gaps of reliable ESG data which mean that we are unable to provide all of the information that we would like to provide on some of the themes presently. The tool will be updated when reliable data is available. The tool’s reference guide details the ESG themes that the tool covers, and the methodology and assessment criteria used.}

_{² The Big Window adviser research conducted for Aviva September 2020}

_{³ Route2 research conducted for Make My Money Matter and Aviva April 2021}

_{⁴ https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/1026224/CCS0821102722-006_Green_Finance_Paper_2021_v5_Bookmarked_48PP.pdf}