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’
|Module||2017 Fidelity Score||2017 Median||2016 Fidelity Score||2016 Median|
Strategy & Governance
Listed Equity - Incorporation
Listed Equity - Active Ownership
Fixed Income - Corporate Non-Financial
Fixed Income - SSA
Fixed Income - Corporate Financial
Fixed Income - Securitised
There are four important inputs into how we analyse ESG for each company that we research - our analysts, our specialist ESG team, external research and our portfolio managers who actively consider ESG in their investment decisions.
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We are continually striving for enhanced ESG integration into our investment process.
We participate in the debate over the development of appropriate standards for responsible investment through our membership in these forums:
International Corporate Governance Network
Asian Corporate Governance Association
Asia Securities Industry and Financial Markets
Hong Kong Investment Funds Association
The Association of British Insurers the Corporate Governance Forum, Investment Association and UK Sustainable
Investment and Finance Association in the UK
The Dutch Association of Investors for Sustainable Development
In addition, we are signatories to the UK Stewardship Code and the Japanese Stewardship Code.
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 UNPRI 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 1,400 signatories from over 50 countries representing US$59 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 governance-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 United Nations 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 and Corporate Governance Working Group 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 18 publicly listed companies and 18 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 score and a lower weighted average carbon intensity compared to that of the broader market.
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.
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.
2 Weighted 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.