Fidelity International to Focus Sustainable Investing Efforts on Key Themes Including Nature Loss, Climate, Governance, Social Disparities
Investment management firm Fidelity International announced today a new focused sustainable investment approach, targeting four systemic themes, including nature loss, climate change, strong and effective governance, and social disparities, which will drive the firm’s engagement approach towards influencing positive change.
According to Fidelity’s Chief Sustainability Officer Jenn-Hui Tan, the four focus themes were selected “as these present the most significant systemic risks for our economic and social systems.
“Failing to address these issues or looking at each issue in isolation will prevent us from collectively transitioning to a sustainable economy and will negatively impact portfolios.”
Fidelity’s focus on nature loss follows the recent launch in late 2023 by the firm of its Nature Roadmap, outlining the company’s approach to the integration of nature in its sustainable investments and stewardship processes. The firm is also a foundation member and signatory of the Finance for Biodiversity pledge, a collaboration of more than 150 financial institutions representing more than $22 trillion in assets under management, committed to protect and restore biodiversity through their financing activities and investments, sharing knowledge; engage with companies, assess impact, set targets and reporting publicly on these activities before 2025. Under its new sustainable investment approach in 2024, Fidelity said that it will address nature loss issues through its engagement activities, and vote against companies in high-risk sectors that fail to meet expectations on deforestation-related practices and disclosure.
On the climate front, Fidelity said that it will continue to reinforce its approach based on its goals, which include achieving net zero across its investment portfolios by 2050 and halving portfolio carbon footprint by 2030. The firm said that it aims to champion further developments in transition finance, including innovation in sustainable debt instruments, and that it will seek regulatory engagement opportunities encouraging governments to close policy gaps to make green technologies cheaper, and with regulators working to effectively channel transition financing.
Fidelity’s social disparities efforts will focus on the Just Transition, with the firm noting that an unintended consequence of initiatives to decarbonize could be increased inequalities, which could “impede climate action and potentially negatively impact individual companies’ prospects, and investors’ portfolios overall.” The firm said that it will utilize active stewardship in 2024, particularly in its thermal coal engagement programme, to support social transitions in communitie that require it most. Fidelity has committed to phase out investment in thermal coal by 2030 in OECD countries and in the rest of the world by 2040.
In its efforts to target “strong and effective governance,” Fidelity said that it will intensify its dialogue, and utilize voting and shareholder resolutions in situations in which companies’ governance-related actions and efforts are deemed inadequate, with a focus on issues including board effectiveness, corporate culture and behaviour, remuneration and shareholders’ rights and transparency.
“In 2024, Fidelity will strive to amplify its active ownership approach as a positive force for driving sustainable business practices in the companies we invest in. In parallel we will continue to contribute actively to the development of key regulations such as SFDR and the implementation of regulation coming into force this year such as CSRD, which we think will be essential for encouraging and harmonising sustainable investing across the industry.”