Fidelity International to focus sustainable investing efforts on nature loss, climate, governance, social disparities

Investment management firm Fidelity International announced 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 a 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.

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, share knowledge; engage with companies, assess impact, set targets and report publicly on these activities before 2025. Under its new sustainable investment approach in 2024, Fidelity said that it would 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 would 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 aimed to champion further developments in transition finance, including innovation in sustainable debt instruments, and that it would 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 decarbonise 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 would utilise active stewardship in 2024, particularly in its thermal coal engagement program, to support social transitions in communities that require it the most. Fidelity has committed to phase out investment in thermal coal by 2030 in OECD countries and the rest of the world by 2040.

In its efforts to target “strong and effective governance,” Fidelity said that it would intensify its dialogue, and utilise voting and shareholder resolutions in situations in which companies’ governance-related actions and efforts were deemed inadequate, with a focus on issues including board effectiveness, corporate culture and behavior, remuneration and shareholders’ rights and transparency.

Source– Fidelity International to Focus Sustainable Investing Efforts on Key Themes Including Nature Loss, Climate, Governance, Social Disparities – ESG Today