We believe that by investing in companies which operate with high standards of corporate responsibility we can protect and enhance investment returns for our clients.
Through our rigorous bottom-up research process we gain an in-depth understanding of Environmental, Social and Governance (ESG) issues at a company level before they escalate and potentially threaten the value of our clients’ investments.
We have been a signatory to the UN Principles for Responsible Investment (UNPRI) since 2012.
We are proud of our ratings - in 2017 we scored A+ in Strategy & Governance and for our fixed income strategies and maintained our A rating for both equity strategies.
Source: UN Principles for Responsible Investment - ‘Overall Strategy &Governance 2017’
Our ESG Scorecard (from A+ rating above)
|Module||2017 Fidelity Score||2017 Median||2016 Fidelity Score||2016 Median|
|Strategy & Governance||A+||A||A||B|
|Listed Equity - Incorporation||A||A||A||A|
|Listed Equity - Active Ownership||A||B||A||B|
|Fixed Income - Corporate Non-Financial||A+||B||A+||C|
|Fixed Income - SSA||A+||B||A+||C|
|Fixed Income - Corporate Financial||A+||B||A+||C|
|Fixed Income - Securitised||A+||E||A+||E|
In 2017, we engaged with more than 760 companies on issues such as governance and remuneration, board composition, capital structure and environment and social issues.
As significant investors in many companies, we believe it is our duty to encourage companies to act in the best interest of shareholders and our environment - for better investment outcomes for our clients. We have engaged with companies on issues such as:
Unlike investments in stocks and bonds, real estate represents a tangible, physical ownership of land or property and as such fund managers can have more control over the E, S and G aspects of their investments.
In this essay we briefly examine the current state of wealth distribution, its causes and the emerging threats to the status quo, to show why inequality is turning into an important sustainability risk - both at a macro and company level.
Cybersecurity and data protection are rapidly emerging as some of the biggest environmental, social and governance (ESG) risks for companies to manage.
Further progress was made in promoting Fidelity’s long-term incentive plans share retention guidelines with most UK companies now having a minimum share retention period of 5 years for shares granted to top executives.
Our analysts continued their research on climate change and the impact of future increase in carbon price on certain industries.
Fidelity became a named supporter of the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD).
Analysts are explicitly required to comment on ESG issues when a company has a poor ESG rating or when it has faced a severe controversy.
The UNPRI defines responsible investment as an approach that aims to incorporate environmental, social and governance (ESG) factors into investment decisions, to better manage risk and generate sustainable, long-term returns. At Fidelity, responsible investment is an integral part of our investment process.
ESG stands for Environment, Social and Governance. Analysing ESG factors can be a key way to assess the sustainability and social impact of an investment in a company or a business. Examples of ESG issues include energy consumption and greenhouse gas emissions, supply-chain risk management, gender diversity, employee productivity, independent board leadership and CEO compensation.
The 2017 Responsible Investment Report details the activities of our specialist Environmental, Social and Governance team over the year. Click here to view this report.
The PRI works with its international network of signatories to put six Principles for Responsible Investment into practice. Its goals are to understand the investment implications of environmental, social and governance issues and to support signatories in integrating these issues into investment and ownership decisions.
The six Principles were developed by investors and are supported by the UN. They have more than 1,750 signatories from over 50 countries representing US$70 trillion of assets.
In 2016, Fidelity's score in Strategy and Governance increased to A+ and we maintained our A ratings on all equity modules, and scored A+ for our fixed income modules.
Active ownership is about using our voting rights and our influence as an investor to improve the long-term value of a company. As stewards of our clients’ money we believe we have an important role to play in improving the governance of the companies in which we invest – helping companies become better companies. We engage directly with companies to encourage good governance and sustainable corporate practices.
You can find more detailed information in our Responsible Investment Policy (PDF).
Members of Fidelity’s ESG team are involved in a wide number of external and collaborative ESG-related bodies globally.
These include the Chairmanship of the Investment Association’s Governance and Engagement Committee, representation on the Code Committee of the Panel on Takeovers and Mergers, the Companies Committee of the Confederation of British Industry and the International Corporate Governance Network’s remuneration committee.
Fidelity is a signatory to the Principles for Responsible Investment, the UK Stewardship Code, the Japanese Stewardship Code, the Hong Kong Securities and Futures Commission Principles of Responsible Ownership and the Taiwan Stock Exchange’s Stewardship Principles for Institutional Investors.
We are also active members of the Asian Corporate Governance Association, the Association of British Insurers, the Corporate Governance Forum, Assogestioni, the UK Sustainable Investment and Finance Association, the Investor Forums in both Japan and the UK, the European Fund and Asset Management Association Responsible Investment Working Group, the Dutch Association of Investors for Sustainable Development and many other trade and industry bodies around the world.
Consideration of Environmental, Social and Governance (ESG) issues is an integral part of our investment decision-making process for all Fidelity funds.
ESG analysis is carried out at analyst level within the equity, fixed income, real estate and multi-asset teams and our portfolio managers are also active in analysing the potential effects of these factors when making investment decisions.
Our specialist ESG team, who sit within our global investment team, ensures Fidelity continues to be at the forefront of developing ESG trends and issues emerging globally.
Fidelity’s internal analysis is complemented by extensive external research and ratings analysis.
Fidelity has a Cluster Munitions and Anti-personnel Landmines (CM & APL) Exclusion List based on guidance from international conventions and supranational bodies. The CM & APL Exclusion list has been formulated using a third party ESG screening product with input from our internal research team. It includes those issuers who actually use, stockpile, manufacture and/or produce Cluster Munitions and Anti-Personnel Mines.
The Exclusion List currently includes 17 publicly listed companies and 19 private companies within eligible investment jurisdictions.
The Exclusion List is reviewed every 6 months.
Climate change and carbon emissions exposure is consistently monitored across our funds and we incorporate these factors into our investment analysis across sectors where it is material. From our research process, we often and consistently engage with companies on their exposure to carbon and their strategy to deal with climate change.
The Fidelity FIRST ESG All Country World fund utilises Fidelity’s extensive in-house research aiming to achieve long-term capital growth by focusing on companies that maintain strong environmental, social and corporate governance credentials.
In particular, it aims to deliver a portfolio with an attractive ESG profile, higher average ESG score1 and a lower weighted average carbon intensity2 compared to that of the broader market.
1Average ESG score is defined as the weighted average MSCI Final Industry Adjusted Score of fund holdings. ©2017 MSCI ESG Research LLC Reproduced by permission.
2Weighted Average Carbon Intensity is defined as the weighted average of the amount of Scope 1 and Scope 2 CO2 emissions per $1million of sales of fund holdings.
We can tailor portfolios for our institutional clients to reflect specific ESG themes or restrictions and we welcome the opportunity to discuss your particular requirements.
We are a signatory of the UK Stewardship Code and we have received an independent assurance opinion on our stewardship & voting processes.
We update our voting record on a quarterly basis setting out how we cast our vote at each company meeting.