Aviva Investors will divest fully from firms who fail to adequately reduce their carbon emissions as part of a newly launched initiative.

The Climate Engagement Escalation Programme will focus on the firm’s investments in 30 ‘Systemically Important Carbon Emitters’, requiring these companies to deliver net zero scope 3 emissions by 2050 and establish robust transition roadmaps to demonstrate their commitment to immediate action on climate change.

The companies facing scrutiny include those from the oil and gas, metals and mining, and utilities sectors that "substantially" contribute to total global carbon emissions.

Aviva Investors said the programme would run for between one and three years, depending on individual company circumstances, and incorporate clear escalation measures for non-responsive businesses or those that failed to act quickly enough.

The speed and adequacy of companies’ response will be determined by a qualitative assessment of progress and quantitative improvements against Aviva Investors’ climate transition risk model, with progress being monitored twice a year.

Escalation measures may include votes against directors, the filing of shareholder proposals, and working with aligned stakeholder groups to apply further pressure, while continued failure to have made sufficient progress by the conclusion of the programme will trigger full divestment across Aviva Investors’ equity and credit portfolios.

Aviva Investors global head of environmental, social and governance research and stewardship, Mirza Baig, said: “Engagement provides us the opportunity to partner with companies as they navigate the challenges of transition. However, for our engagement approach to have impact, it must be accompanied by a robust escalation process, including the ultimate sanction of divestment.”

Aviva Investors chief investment officer, Colin Purdie, added: “Creditors have an increasingly important role to play in helping to deliver climate change mitigation and transition, as well as addressing wider ESG concerns. Pockets of green finance do not go far enough.

“Creditors must act decisively and collaboratively to embed sustainable principles across the market, from large public companies to smaller, private high-yield issuers. Credit markets are a potentially powerful but largely untapped force that could exert significant influence on companies through the billions of dollars of debt financing they provide.”

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