Fidelity International will crack down on investee companies that fail to meet its new climate change and gender diversity policies.
The global asset manager has published a set of global policies entitled Sustainable Investing Voting Principles and Guidelines which aims to hold investee companies to account, utilising its right to vote against boards that do not meet expectations.
Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity International, said: “At Fidelity we believe that exercising our ownership rights by voting at company meetings is a fundamental responsibility for shareholders.
“Through the use of engagement and voting, we aim to improve the governance and sustainability behaviours of our investee companies.”
The new policies cover 12 topics focusing on key environmental, social and governance areas which Fidelity believes need “urgent and significant improvement.”
Investee companies will be expected to take action to manage climate change impacts and reduce their greenhouse gas emissions as well as make specific and appropriate disclosures around emissions, targets, risk management and oversight.
From 2022, Fidelity will vote against company management when companies fall short of its minimum expectations.
Tan explained: “Our message to investee companies is clear; the climate crisis must not and cannot be ignored. It impacts the very nature of major industries in which we invest and as such must be high on the agenda of all companies.
“At Fidelity, we’re working collaboratively with peers in the Net Zero Asset Managers initiative, supporting the transition towards global net zero emissions.
“We expect investee companies to do the same and have policies in place to reduce carbon and other greenhouse gas emissions. This includes setting and reporting on ambitious targets aligned to the UN’s Paris Agreement on climate change including an approach to Net Zero.”
In addition, Fidelity will also take action against companies that fail to meet its gender diversity expectations, pledging to vote against company management in developed markets that do not have at least 30% female representation on the board of directors. In markets where standards on diversity are still developing, Fidelity has set an initial 15% target.
Paras Anand, CIO, Asia Pacific at Fidelity International, commented: “An increasing body of research has shown that organisations that promote diversity are more productive and better performing.
“We know from our own company that a diverse and inclusive workplace brings benefits for our customers, our business and our people. At Fidelity, we are committed to actively engaging with our investee companies in the UK and globally; driving them towards more ambitious gender diversity goals, and ensuing we are holding them to account where our expectations are not met.”