Aviva boss says climate change is ‘key’ despite net-zero backlash
The boss of Aviva has insisted that climate change remains “critical” for the insurer, despite a wider backlash against net-zero initiatives in the financial sector and its own problems hitting green targets.
Pressure on the climate agenda has mounted in recent months, particularly in the United States, where banks and asset managers have rowed back on some of their environmental commitments after the victory of Donald Trump, a climate change sceptic, in November’s presidential election. HSBC, Britain’s biggest bank, revealed last week that it was pushing back one of its main net-zero targets by two decades to 2050.
In its annual report on Thursday, Aviva, one of Britain’s biggest insurers and asset managers, also warned that it was facing obstacles in achieving its goal of becoming a net-zero business by 2040.
It said “the complexities and challenges are coming into sharper focus” and highlighted the problem of measuring greenhouse gas emissions from the companies in which it was an investor or provided underwriting services.
“When these emissions are aggregated at a portfolio level, it introduces significant double-counting. Based on what we understand today and the low degree of control we have over these emissions, we do not currently see a route to net zero,” it said, adding that it was “committed to using our best endeavours to address them”.
Dame Amanda Blanc, the chief executive of Aviva, said that “as an insurer, climate change is critical to us” as global warming drove an increase in extreme weather events.
She pointed to Canada, where Aviva has a big business and which last year suffered its worst natural catastrophe season after the country was ravaged by hailstorms, flooding and wildfires in quick succession in July and August. This has dealt a blow to insurers covering the cost of the damage and disruption.
“Undeniably we would see that linked to climate change,” Blanc said of the rising frequency of extreme weather events. “We are an insurer and we have to be able to predict our pricing for us to be able to underwrite risk.”
She was speaking as Aviva posted a 20 per cent jump in annual operating profits last year to almost £1.77 billion, surpassing the £1.67 billion expected by City analysts. The company was boosted by growth in general insurance premiums — an area that is drawing scrutiny from politicians because of a recent surge in the cost of car cover, which has led to claims that the industry is profiteering. Blanc, 57, pointed to the rising cost of car parts and wages in repair shops as having driven up the cost of covering claims across the market.
Aviva is poised to expand its motor business through its pending £3.7 billion takeover of Direct Line, which was agreed in December and was “on track”, Blanc said.
Asked whether she was open to pursuing other acquisitions, she said “we’ve got quite a lot on our plate”, having also bought a business from AIG last year and Probitas, a Lloyd’s of London insurer. “We don’t really need to do any acquisitions, but never say never.”
The deal spree caps a near five-year turnaround of Aviva by Blanc. The company said in its annual report that its board remuneration committee had handed her a 10 per cent salary increase to £1.23 million this year to reflect her “exceptional” performance. Her total pay for 2024 was £7.2 million, including an annual bonus, share awards and other benefits. That compared with £7.3 million in 2023.
Aviva shares were up 19¼p, or 3.6 per cent, at 543¾p in afternoon trading, their highest in more than 15 years.