Introduction

The case for climate investing

Accelerating climate change is rapidly closing the window for stabilising global temperatures, and emerging research since the IPCC’s Sixth Assessment Report indicates that the lowest plausible mitigation pathways now involve a temporary overshoot to around 1.7°C before temperatures can decline. Achieving this outcome demands around a 60% cut in global greenhouse gas emissions by 2035, driven by steep reductions in unabated fossil‑fuel use, major renewable‑energy expansion and selective carbon‑dioxide removal. While avoiding a 1.5°C overshoot is no longer feasible, research shows it is still possible to return warming toward 1.5°C later in the century if near‑term mitigation accelerates significantly¹.

Achieving this will require a substantial acceleration in global climate investment. Recent research shows that annual climate‑finance flows grew by an average of 26% between 2021 and 2023, compared with growth of just 8% from 2018 to 2020. If sustained, this trajectory could scale annual flows from today’s low‑trillion‑dollar levels to around USD 6 trillion per year by 2028 -the most conservative estimate of required investment - provided capital continues to be directed toward genuinely climate‑aligned solutions².

The transition is increasingly shaping credit markets, influencing financing costs and exposing companies to greater dispersion in risk. Issuers that adapt early – strengthening their transition plans, managing physical risks and aligning capital expenditure – are better positioned to maintain market access and resilience, creating compelling opportunities for active credit investors.”

Thomas Chinery, Global Climate Credit Portfolio Manager

¹Riahi, K., Clarke, L., Hasegawa, T., Huppmann, D., Kriegler, E., et al. (2025). Mitigation benchmarks from the 2025 community update of global emissions pathways (Version 1). Research Square. https://doi.org/10.21203/rs-3-rs-8891091/v1²Climate Policy Initiative. 2025. Global Landscape of Climate Finance 2025. https://www.climatepolicyinitiative.org/publication/global-landscape-ofclimate-finance-2025/

Companies are already experiencing the financial and physical pressures of a warming world, and these impacts are set to intensify as regulation tightens, technology adoption accelerates and investor and consumer expectations continue to rise.

In this environment, we expect far greater dispersion in corporate performance, with firms proactively positioning for the transition better placed to capture emerging opportunities, while those slow to respond face mounting strategic and operational risks.

The cost of inaction is also becoming clearer: research shows that failing to curb warming could impose severe long‑term economic losses – around 15% of global GDP by 2050 under 2°C of warming, rising to 30% by 2100 under 3°C.

³Network for Greening the Financial System (NGFS) (2024) Phase V climate scenarios. NGFS, November. https://www.ngfs.net/en/ngfs-climate-scenarios/phase-v .

The Aviva Investors Global Climate Credit (GCC) Strategy

A high conviction, actively managed Strategy that aims to deliver long-term capital growth whilst aligning with a net-zero pathway by 2050. We focus on bonds issued by companies that are deemed to be effectively responding to climate change.

Two equally improtant and positively aligned objectives

Long-term capital growth

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Aligning to a net-zero pathway by 2050

Investing in and engaging with companies in two types of categories

Solutions

Products or services that help mitigate or adapt to climate change

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Operations

Leading in aligning their operations to a lower carbon economy

Journey To Net-Zero

Our strategy targets 50% of assets by 2030 in companies with committed or verified SBTs, or equivalents, and 100% of assets by 2040, subsequently aligning to a 2050 net-zero pathway³.

Past performance is not a reliable indicator of future results. Internal targets may not be achieved.
Source: Aviva Investors, as at 31 December 2025. SBTi – Science Based Targets initiative.

³ In line with internal framework for Net-Zero alignment utilising industry standards such as IIGCC (Institutional Investors Group on Climate Change) Net-Zero framework and SBTi Corporate Net-Zero standard.

The Strategy has 3 distinctive elements:

Our Approach

1.

Our bespoke climate approach

2.

Our robust portfolio construction process

3.

Our targeted engagement programme

Targeted Outcomes

increases our opportunity set to deliver more diversified sources of return.

avoids an overreliance on beta and anchors the portfolio in resilient, income-generating credits, aiming to deliver enhanced capital preservation.

supports our alignment to a net-zero pathway; it engages with all portfolio holdings and aims to drive positive climate outcomes.