Fidelity International (‘Fidelity’) today announces its revised sustainable investing framework, to adjust to an evolving sustainable investing landscape, in line with client requirements and environmental, social, governance (ESG) regulations.
Sustainability is an important component of Fidelity International’s active investment approach. The firm has a robust investment research methodology incorporating sustainability as part of its fundamental investment research, utilising the firm’s proprietary sustainability ratings, and combining this with insights from its equity, credit, macro and quantitative research, to gain a complete view of the companies and markets that it monitors. This framework has been designed to complement the firm’s overall investment approach, and enhances clarity and transparency for its clients.
In the revised framework, Fidelity has created three high-level categories:
1. ESG Unconstrained: This category includes products that aim to generate financial returns and may, or may not, integrate ESG risks and opportunities into the investment process. Products in this category adopt Fidelity’s firmwide approach to exclusions.
2. ESG Tilt: This category includes products that aim to generate financial returns and promote environmental and social characteristics through a tilt towards issuers with stronger ESG performance than the product’s benchmark or investment universe. Products in this category adopt the ESG Unconstrained exclusions and further exclusions apply such as tobacco production, thermal coal mining, thermal coal power generation and certain sovereign issuer exclusions.
3. ESG Target: This category includes products that aim to generate financial returns and have ESG or sustainability as a key investment focus or objective, such as investing in ESG leaders (issuers with higher ESG ratings), sustainable investments, a sustainable theme (such as climate or transition investment) or meeting impact investing standards. Products in this category are subject to the enhanced exclusions mentioned above and further exclusions may apply.
Jenn-Hui Tan, Chief Sustainability Officer at Fidelity International comments: “We have long been committed to sustainable investing and have continued to evolve our approach and capabilities in line with client requirements and ESG regulations. The integration of sustainability into investment research and portfolio construction is part of our fundamental process to identify the drivers of long-term value creation.
“Our revised framework aims to facilitate the creation and maintenance of a consistent, transparent, and practical range of investment capabilities that meet evolving client and regulatory needs. We believe this framework balances a robust approach to sustainability with a flexible approach that can accommodate different investment styles, asset classes and client preferences.”
