AVIVA INVESTORS Harvard Case Solution & Analysis


Q-1: What are your critics of Aviva’s policy and approach to shareholder engagement?

Being an advisor to the CEO;Paul Beverley,of Avila investors;there are weaknesses in Aviva’s approaches regarding the shareholder’s engagement. The first approach is the integration of environmental, social, and governance (ESG) factors into investment decisions that enable to establish a partnership with the fund managers and analysts, for investment decisions.The second approach is the participation of shareholders through engagement and voting. This enables the company to maintain good practices with the companies in which Aviva invests.

This approach helps the company in reducing the risks associated with the investments for clients to some extent as well as in gaining an insight to broaden the economy and society.The third approach is to favor the reform of the market, which includes:promoting a sustainable capital market;however, this is possible by working with the UN, EU,and national level to rectify the market failures. However, the major drawback of Aviva’s approaches and policies is risk management. In the case of making investment decisions by engaging with shareholders;there are chances that the decision would not be efficient because of the lack of shareholders’ knowledge.

Furthermore, the investment decisions drawn from voting might be profitable for the shareholders as well as the company in the short run, but in the long run; it is not the feasible decision and wouldn’t be favorable for the company’s value. Moreover, the company follows the corporate responsibility voting policy which enables the stakeholders to participate in decision making; however, there is a lack of dissemination of information in a timely manner that could create distress amount the shareholders and the potential clients.(Serafeimrob, 2015)

Q-2: How would you organize it differently to bring it more in line with Aviva and its clients’ goals and values?

To be sustainable in the market for a long-term;the company needs to focus on information to ensure that the capital market functions efficiently,because if only financial factors are concerned and investment decisions are made by considering these factors, then the company might lose its value in the market, in the long term. The information must be market-driven and must reflect the demand patterns of customers.Moreover, the company’s investment decisions must be organized in a way that they are aligned with the governance risks, opportunities, environmental and social risks that the company is exposed to.Therefore, for decision making concerning the engagement must be based on the following the factors, such as:the situation due to which the issue has occurred, best practices and investors’ preferences must be considered, factors and explanation by the company, significance of the issues for both parties, portfolio strategies, the scope of the issue, limitations of resources available for the company, alternative solutions available, scope of support by the shareholders, consequences of delayed decision and factors to mitigate the consequences in the short run and long run.

Furthermore, the company needs to follow corporate governance policies rigidly for engagement with shareholders through proxy voting. There must be an efficient emphasis on the agenda that must reflect the goals of the voting that should be aligned with the goals and values of the client as well as the shareholders. The goals of investors are management, protection, and enhancement of funds where shareholders invest so that decision is based on the longer-term sustainability of the company.Moreover, the company must ficus on alignment of its goals and values with the clients so that client feels connected to their capital and they know the use of their investment to become more satisfied. However, the company needs to share information or areas of concern frequently with the clients and shareholders and not just in times when the issues arise and there is a situation of distress in the company so that the clients and the shareholders could identify risks and threats which the company is facing or might face in the near future,promptly..............

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