Fidelity International outlines strategic priorities for sustainable investing in 2023

Fidelity International today outlined its strategic priorities for sustainable investing in 2023. 

As one of the biggest disruptive trends of the industry, demonstrated by recent global events such as the global health pandemic, the energy crisis, or the serious effect of climate risks on the environment and societies, sustainable investing has been high on the public agenda.

Coupled with increasing ESG regulation from different markets, this signals that sustainable investing is becoming mainstream across the globe. 

Fidelity is committed to sustainable investing and has a well-defined ambition to achieve net zero at a corporate level by 2030, and for its investments by 2050¹. At the heart of Fidelity’s approach to sustainable investing is ESG integration underpinned by fundamental research and insights and an active ownership programme through which Fidelity seeks to drive sustainable investment outcomes in partnership with the companies in which it invests.

Over the years Fidelity has launched a number of dedicated policies and roadmaps such as the climate investing policy², the deforestation framework³ and refreshed voting principles and guidelines⁴. It is also a signatory of key climate and biodiversity initiatives and plays an active role in supporting industry regulatory working groups.     

Fidelity continuously strives to put strategy into action and aims to focus on three key sustainability priorities this year:

1. Active ownership

As companies further develop their business, the range of non-financial factors that influence financial value continues to increase and constitute key success factors.  As an active asset manager, our role is to help our investee companies anticipate, prepare, and adapt to disruptions and changing market conditions with a view to delivering resilient and sustainable growth over the long term. To this end, we continue to evolve our approach to active ownership in 2023 through a range of connected, influencing strategies that seek to achieve the better long-term financial, environmental and social outcomes which are integral to our clients’ futures. 

2. Natural Capital

The loss of biodiversity is unprecedented and is accelerating. Over the past 50 years, global wildlife populations have reduced by 68%⁵ and this is posing a serious threat to global economic prosperity and supply chains. It is also exacerbated by its direct connections with climate change: climate change is one of the main drivers of biodiversity loss, but destruction of ecosystems undermines nature’s ability to regulate greenhouse gas emissions and protect against extreme weather, thereby accelerating climate change. Regulatory frameworks such as the EU taxonomy and Taskforce on Nature-related Financial Disclosures (TNFD) are helping to address some of these issues. Fidelity is a signatory to the Finance for Biodiversity Pledge (FfB) and a member of the Natural Capital Investment Alliance (NCIA).

3. Just Transition

As we aim to collectively decarbonise key sectors of the economy, we mustn’t forget the social implications of such a transition and the impact on labour markets and workforces. Indeed, collective efforts to decarbonise should not leave certain groups of individuals or communities whose livelihoods are dependent on fossil fuels or carbon intensive industries behind, either economically or socially. When engaging with companies on climate change and implementing our own decarbonisation strategy, we explicitly integrate the principle of a “Just Transition”, pushing companies to consider the social implications of their decarbonisation approach. A Just Transition also forms a core aspect of Fidelity’s thematic engagement on thermal coal, where energy security implications and inclusivity are embedded in the engagement’s objectives.

Jenn-Hui Tan, Global Head of Stewardship and Sustainable Investing at Fidelity International, comments: “2023 is going to be a pivotal year for sustainable investing as we concentrate efforts on reallocating capital in a sustainable way and help companies transition from brown to green.  We are entering a new phase of sustainable investing which reflects both the better availability of data and a more mature approach to ESG integration: one that acknowledges the necessary trade-offs between the short-term decisions required to remain in business versus the longer-term needs of customers, employees, and communities. New waves of regulation expected this year will also contribute to harmonising sustainability and disclosure frameworks and encourage firms to progress further in their transition.

“Our three priorities of active ownership, natural capital and just transition will help drive the sustainability agenda for Fidelity and deliver long-term value creation to our clients while accelerating the transition towards a low carbon and more inclusive economy.”