This information is for investment professionals only and should not be relied upon by private investors.
A sustainable future demands real engagement
At Fidelity International, our purpose is to work together to build better financial futures for our clients. As a family and management-owned company, we think generationally in terms of the services we build and provide, as well as the way in which we invest on our clients’ behalf.
While our primary focus is on delivering sustainable investment returns for our clients, we also recognise the importance of managing our impact on society and the environment. To do this, we incorporate sustainability into our business operations and into our investment process, actively engaging with our investee companies to help them operate more sustainably, improving client outcomes and securing a better future for all.
Why we favour engagement over exclusion
As global investment managers, we believe how we hold investee companies to account today will help shape a more sustainable tomorrow. That’s why we place active engagement at the core of our approach to sustainable investing. We believe that working with companies to improve their sustainability practices and awareness of ESG risks will help create more resilient business models, which should in turn translate into the long-term sustainability of a company and positive investor returns.
Engaging with our investee companies also offers a dual objective: to gain enhanced and holistic investment insights which inform our investment analysis, and to foster constructive change aligned with best practice to protect and enhance long term value for shareholders.
“For engagement to be meaningful, it must go beyond simply sending an email to a generic company inbox. Our approach adds value by demanding direct dialogue with leadership teams and working closely with other stakeholders for maximum impact”
Jenn-Hui Tan, Global Head of Stewardship and Sustainable Investing, Fidelity International
Integrating ESG risks into our analysis
Our commitment to assessing companies on sustainable investment issues took a significant step forward in 2019 with the launch of our proprietary Sustainability Ratings system.
This analysis leverages Fidelity’s extensive fundamental research capabilities and ongoing engagement with companies, supported by the expertise of the Sustainable Investing team, to provide a more forward-looking evaluation of a company’s performance and trajectory on sustainability issues.
ESG integration at Fidelity is an investment analysis input, and not an overlay. We use several external research sources, which are regularly reviewed and updated, to complement our internal research
Through the sustainability ratings framework we assess the exposure of financial securities to sustainability risks, including to what extent the issuers of these securities deliver on our expectations. The sustainability ratings draw upon the assessments of more than 180 equities and fixed income analysts who take part in more than 16,000 company meetings a year. These are updated at least annually, and on the occurrence of a significant ESG event.1
The ratings have been fully integrated into our investment process and are available to all members of the investment team on our internal research platform.
1Source: Fidelity International, December 2021
Tackling emissions as a company and an asset manager
At Fidelity International, we are taking action on behalf of our clients and society. We have brought forward our company net zero pledge from 2040 to 2030. We have called on governments to use policy signals to speed up the transition, and have committed to net zero alliances following the UN climate conference (COP26).
Fidelity has also been a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) from its early stages. Although we are a private company and do not have public shareholders or disclosure requirements to the same extent as public companies, we believe that it is as important for us to perform as highly against the broad spectrum of ESG principles as the clients we serve and companies in which we invest.
But we believe the biggest contribution we can make is through urging our investee companies to decarbonise more quickly. In the last year, we have done just that with some of the world’s heaviest emitters through the collaborative Climate Action 100+ initiative. We have persuaded more banks to end coal financing, highlighted the social costs of climate change, and challenged companies to preserve biodiversity.
2Source: Fidelity International, as at 31 December 2021 3Source: Fidelity International, March 2022
Links and documents
- Engagement hub
- Sustainable Investing Report 2021
- Our sustainable solutions
- Climate Investing Policy
- Sustainable Investing Policy
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This information is for investment professionals only and should not be relied upon by private investors. The value of investments can go down as well as up and clients may get back less than they invest. A focus on securities of companies which maintain strong environmental, social and governance (ESG) credentials may result in a return that at times compares unfavourably to the broader market. No representation nor warranty is made with respect to the fairness, accuracy, or completeness of such credentials. The status of a security’s ESG credentials can change over time. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document and annual and semi-annual reports, free of charge on request by calling 0800 368 1732. Issued by FIL Pensions Management, authorised and regulated by the Financial Conduct Authority and by Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0322/370649/SSO/NA