Building bridges to net zero

Read this article to understand:

• Why value chain mobilisation is essential for achieving real-world decarbonisation
• How a collaborative approach uncovers actionable insights across complex sectors
• The role of value chain engagement in shaping policy insights and enhancing investment views

From aviation to heavy industry, every sector operates within a network of suppliers, regulators, and consumers, creating a tightly woven – and often rigid – system resistant to change.

At Aviva Investors, we view value chain mobilisation as central to our holistic approach to stewardship (see “Only Connect: How a holistic approach to investment stewardship can enhance client outcomes”).¹

By bringing together stakeholders from across the value chain of key hard-to-abate sectors like transport, buildings, and power – from suppliers and peer companies to regulators and end-users – we aim to address climate challenges at both the corporate and systemic levels. 

Each roundtable has been designed to:

1. Facilitate systems-level collaboration: Our roundtables foster dialogue which enables participants to develop a shared systems-level understanding of challenges specific to their sector. In addition, stakeholders identify solutions, from what would help technologies scale to what policies would be most supportive. By breaking down barriers and synchronising efforts, these discussions reveal collaborative pathways that can enhance decarbonisation across sectors. 
2. Inform policy positions: These sessions are instrumental in identifying priority areas for policy action. They are supported by and help guide our macro stewardship team in its engagement with policymakers to address barriers to the transition and bolster low-carbon investment conditions (see “Macro Stewardship: An introduction”).²
3. Generate investment-relevant insights: Each roundtable provides insights into sector-specific risks, opportunities, and trends, informing our investment views. These insights refine our sectoral roadmaps, and allow us to benchmark company performance and identify key engagement opportunities to build more climate-aligned, resilient portfolios.

Beyond corporate engagement: Why a systemic approach matters

Corporate engagement has proven effective in advancing climate awareness and encouraging companies to raise their sustainability ambitions (see Annual Sustainability Review 2023).³

However, over two decades of climate-related dialogues have taught us that, for companies to achieve their transition goals, investor engagement also needs to tackle the complex, interconnected systems within which these firms operate. 

For example, the chemicals sector faces complex supply-chain dependencies and technological hurdles, such as green hydrogen deployment. But a constructive dialogue between the actors involved can align decision-making at all levels – financial, regulatory and technological – to overcome these barriers. 

Embracing a holistic stewardship approach

At Aviva Investors, we’ve evolved our stewardship approach to embrace and reflect the nuanced, multi-layered nature of these challenges. By leveraging our influence across multiple levels within the global financial architecture – through collaborations with investee companies, tenants in our property investments, sovereign issuers, policymakers, and other standard setters – we strive to foster an environment where systemic change can take root.⁴

Figure 1: Levels of influence

Source: Aviva Investors, 2024.

Value-chain engagement lays the foundation for our holistic stewardship framework. This approach – whereby we convene key players across hard-to-abate sectors – allows us to go beyond traditional corporate interactions, breaking down silos and promoting knowledge-sharing and partnerships across sectors.

By connecting stakeholders, we pave the way for shared problem-solving and collaboration that spans industries and regions. Through this approach, our stewardship extends across value chains, and seeks to drive tangible, lasting progress, by influencing policies, technologies, and financial incentives (see Figure 2).

Figure 2: Value-chain mobilisation

Source: Aviva Investors, 2024.

Mobilising value chains for real-world change

Since 2023, we have initiated our roundtables to mobilise entire value chains within key demand-side sectors – such as aviation, surface transport, buildings and power – poised for significant climate change mitigation. These hard-to-abate sectors are substantial drivers of fossil fuel demand, accounting for approximately one-fifth of total CO₂ emissions (see Figure 3). 

Together, they represent critical nodes within the energy system, and they face substantial challenges, from minerals sourcing to battery technology, infrastructure, and industrial manufacturing. Their deep integration into the global economy presents significant technological and infrastructure challenges, highlighting the need for substantial innovation, policy coordination, and systemic change (see Why value-chain engagement is essential).

Yet they also present key investment opportunities, as achieving net zero hinges on unlocking investment to foster commercially viable low-carbon projects and business models in these sectors.

Some of the key cross-cutting themes that have emerged from the discussions to date relate to financial barriers for companies and consumers, consumer sentiment and hesitancy to adopt low-carbon measures, the lack of ready infrastructure, regulatory and investment uncertainty, the need for workforce development, and challenges in supply-chain development. 

These insights inform our ongoing investment considerations, engagement goals, and public-policy positions, which mutually reinforce each other and help drive real-world outcomes. 

For instance, some of the roundtable insights informed part of the recommendations in our roadmap, “Boosting low-carbon investment in the UK”, published in July 2024.⁶ This roadmap outlines strategies to address both sector-specific and cross-sectoral challenges in the UK, such as predictable carbon pricing, targeted green infrastructure incentives, and enhanced reporting standards. They have also fed into our consultation responses, such as our latest submission to the UK Government’s Industrial Strategy consultation, “Invest 2035,” which aims to align economic growth with net-zero goals.

Moreover, the insights have helped us establish benchmarks for best practices, informing our company-level (“micro”) engagement strategies. For instance, we have transposed the low-carbon roadmap recommendations into our baseline expectations on climate advocacy for companies.

And these discussions have provided us with valuable insights into sector-specific risks, opportunities, and trends, directly informing our investment views.

Scaling up: The road ahead for value-chain engagements

Looking forward, we will expand our value-chain mobilisation efforts in 2025 within high-emission sectors, starting with heavy industry and food/agriculture. We will also continue our efforts in the sectors covered to date, as industries like transport, power and buildings are dynamic, and we see value in deepening the dialogue with participants. 

We intend to then shift our focus to cross-economy themes, broadening our impact across the value chain. As we do, these roundtables will continue to serve as a forum for dismantling systemic barriers and generating insights that shape policy and investment strategies. 

By engaging stakeholders across critical areas, we are helping to pave the way for comprehensive decarbonisation, accelerating the transition to net-zero. We embrace our role as investors, and aim to help build a decarbonised global economy, driving effective stewardship that aligns with the realities of hard-to-abate sectors and works collectively toward a sustainable future.