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“What gets measured gets done”: Amanda Blanc, CEO of Aviva

“What gets measured gets done”

Amanda Blanc
CEO of Aviva

“This is not a fad,” says Amanda Blanc, CEO of Aviva, discussing the growing momentum around business commitments on issues such as sustainability and diversity.

“Top of our agenda is looking at how we are running the business, not just for today but for three years, five years, 10 years, 20 years’ time and beyond.”

That focus on the longer term cannot come at the expense of success today, adds Blanc, but CEOs must be more adept at balancing short- and medium-term performance with longer-term non-financial priorities.

Legacy and leadership

“You can’t just focus on leaving a legacy and forget that dividends need to be paid, and results need to be achieved today,” says Blanc, speaking to PwC for the 25th Annual CEO Survey. “But Aviva has been in existence for 325 years and as much as investors might sometimes want us to think quarter by quarter, you cannot just think like that. You have to do the right things. I hope in another 325 years, whoever is leading this organisation can look back and say key decisions taken on ESG were fundamental in Aviva’s success and longevity.”

In 2021, Aviva updated its environmental, social and governance (ESG) commitments, and Blanc is aware the organisation has a clear opportunity to not only shape its own impact on the world but to shape the impact of organisations within its sphere of influence.

“We have hundreds of billions of pounds of assets under management, we have a huge opportunity to influence where we invest.”

“At the beginning of last year we spoke to the top 30 carbon emitters in our equity portfolio and said to them ‘you have three years to sort yourself out and come up with a transition plan, otherwise we will be disinvesting’.”

Aviva requires all of its suppliers to demonstrate a clear commitment to net zero by 2040, and will not invest in businesses, or underwrite businesses, where more than 5% of revenue comes from fossil fuel.

Carrot or stick?

Blanc says Aviva is not trying to wield its financial clout as a punitive ‘stick’, but wants to drive meaningful conversations and action around ESG.

“Today it is more of a ‘carrot’ than a ‘stick’. But it is a continuum,” she says. “We don’t want to divest. Our strategy is engagement not divestment. But that’s today. If we’re still having the same conversations in two years, that will be different. It will become more ‘stick’ than ‘carrot’.”

Such scenarios highlight the extent to which ESG commitments are not only ‘the right thing to do’ but are fast becoming essential to the success of businesses.

Given that growing importance to business, Blanc says it is essential there is rigorous planning, measurement and reporting, as well as common language, around ESG performance, to ensure consistency and credibility, and to reduce the risk of ‘greenwashing’ or superficial gestures.

“As a FTSE CEO you can’t just sign up to initiatives without taking your board through the business rationale and the hard work needed behind the scenes,” she says.

“When we looked at our portfolio and asked if we could become net zero by 2040, I couldn’t just make that statement, we had to go line by line through our portfolio to decide if it was achievable. I can’t go out to the market and make statements that cannot be backed up.”

Accountability to such commitments is also critical. Last year, Aviva aligned 10% of its executives’ long-term incentive plan to the company’s performance on sustainability and diversity targets.

“I do think accountability can move the dial on ESG,” says Blanc. “It’s not the only mechanism, but having that in the scorecard shows investors we are serious about it and it shows the outside world that we are serious about it.”

And while some may suggest business leaders should be prioritising sustainability and diversity without requiring financial reward, Blanc says treating ESG like other measures that CEOs are currently rewarded for - such as profit and growth - is an important step in recognising, and communicating their significance.

“I am a big believer in what gets measured gets done,” she says. “If all you are making is bland statements then who can be held accountable for that?”

“Investors are also expecting to see this kind of accountability,” says Blanc. “Investors are asking how our remuneration is tied to ESG targets, the same as they have always asked how our remuneration is tied to profitability.”

Staying relevant

Making ESG a core component of business strategy can also help organisations remain more relevant to customers, says Blanc, speaking specifically about the importance of diversity.

“We have around 15 million customers in the UK,” says Blanc who is the government’s Women in Finance Champion. “You cannot have an organisation that doesn’t reflect the diversity of those customers any more than you can have an organisation that ignores its role in society when it has so much money to invest.”

“These commitments aren’t going away,” she adds. “This isn’t just a gesture.”

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Marco Amitrano

Marco Amitrano

Head of Clients and Markets, PwC United Kingdom

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