Fidelity International has reinforced its commitment to sustainable investing, with a focus on four key themes it believes pose the biggest risks economically and socially.
Fidelity said its four systemic themes of nature loss, climate change, strong and effective governance and social disparities will help drive the firms’ engagement approach to influence positive change.
Nature loss
In 2023, Fidelity launched its Nature Roadmap, where nature and deforestation are highlighted as priorities for the firm. This is in addition to the integration of biodiversity criteria to its ESG frameworks and the support of a bioacoustics project aimed at developing a measurement tool using advanced technology.
The investment firm said it will continue to address these issues through its engagement activities in 2024, and in particular will vote against companies in high-risk sectors that do not meet its minimum standards of deforestation-related practices and disclosure.
Climate change
In line with its ambition to achieve net zero across its investment portfolios by 2050, including halving its portfolios’ carbon footprint by 2030, Fidelity will continue to reinforce its approach to addressing climate this year.
It will be championing further developments in transition finance, including innovation in sustainable debt instruments. Fidelity will also seek opportunities to encourage governments to close policy gaps to make green technologies cheaper.
Social disparities
Fidelity said it will continue to focus on social disparities which arise from decarbonisation efforts and which could impede climate change, as well as negatively impact individual companies’ prospects and investors’ portfolios.
In 2023, Fidelity carried out research which highlighted that only 42% of investors are familiar with the concept of a ‘just transition’, of which only 35% have or are developing a dedicated investment strategy focused on a ‘just transition.’
This year, Fidelity plans to pursue its efforts to help decarbonise the economy, while supporting social transitions in the communities that need it the most.
Strong and effective governance
Fidelity has vowed to take action where companies’ own actions and efforts are deemed inadequate, through voting and shareholder resolutions. It said it will continue to focus on issues such as board effectiveness, corporate culture and behaviour, remuneration and shareholders’ rights and transparency.
Jenn-Hui Tan, chief sustainability officer at Fidelity International, said: “In line with our ambition to address sustainability-related challenges and to continue to generate strong financial outcomes for our clients, we have focused on the themes of nature loss, climate change, governance, and social disparities 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.
“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.”
