Fidelity International has committed to halving emissions from its investment portfolio by 2030 and has set deadlines for the phase out of thermal coal exposure.
The global asset manager with total client assets of US$787.1 billion, has introduced a new climate investment policy, one it assures is engagement-led and aligns its long-term, active asset management strategy with a net zero future.
In a statement on Wednesday, Fidelity pledged to reduce CO2 emissions across its portfolio by 50 per cent by 2030, from a 2020 baseline, with the help of its proprietary Climate Ratings, which will be rolled out for all companies in Fidelity’s investment universe.
“As a responsible investor, we must understand the carbon footprint of the portfolios we manage for our clients and work with the companies we invest in to reduce emissions in alignment with global net zero targets,” said Jenn-Hui Tan, global head of stewardship and sustainable investing, Fidelity International.
Leveraging Fidelity's in-house research capabilities, the Climate Ratings will allow the asset manager to assess the net zero ambition and alignment of investee companies and use these to set targets for the net zero pathway of its funds. Companies will be placed into one of five buckets, depending on their score – achieving or enabling net zero; aligning to a net zero path; high transition to net zero potential; low transition to net zero potential; and, no evidence of transition potential.
“Fidelity invests in many of the world’s leading companies, and we want to use our influence as active stewards of capital to help the world meet its climate goals. This long-term, engagement-led policy aims to hold businesses to account for their carbon footprint and ensure that transparent public markets are a powerful force for decarbonisation,” Mr Tan said.
“These ratings will ensure we focus our efforts on the biggest emissions reduction opportunities. Targeted engagement will be crucial in meeting our portfolio emission goals,” he added.
Moreover, taking further action on the thermal coal front, Fidelity also pledged to phase out exposure to the thermal coal sector in OECD countries by 2030 and by 2040 globally. And while divestment is a "last resort", the asset manager confirmed that it will look to divest individual companies that do not show progress towards net zero in a timeframe not exceeding three years.
“Immediately exiting our exposure to more carbon-intensive companies will diminish the impact we can make through active engagement and is unlikely to make a difference to real world emissions nor will it address the energy needs of many countries today,” said Mr Tan.
“In addition, as the pace of innovation and technological development increases, we will continue to review our targets making sure we remain flexible and able to respond to significant developments in this space.”
Fidelity International is a proud partner at the upcoming InvestorDaily ESG Summit.
Speaking about the asset manager's involvement, the managing director of its Australian unit reiterated the company's net-zero commitment.
"We are committed to a net-zero future, and we’re taking action on behalf of our clients and society to contribute to a more sustainable future. We cannot do it alone, but with collaboration with others, we can make a real difference,” said Alva Devoy, managing director of Fidelity Australia.
Maja's career in journalism spans well over a decade across finance, business and politics. Now an experienced editor and reporter across all elements of the financial services sector, prior to joining Momentum Media, Maja reported for several established news outlets in Southeast Europe, scrutinising key processes in post-conflict societies.
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