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Fidelity commits to halve portfolio emissions by 2030

By Yasmine Masi28 October 2021

Global asset manager Fidelity International has pledged to reduce CO2 emissions across its investment portfolio by 50% by 2030 as part of its enhanced climate investing policy, which aligns its long-term, active asset management strategy with a net zero future.

This comes after the firm, with total client assets of almost US$800 billion, committed to the Net Zero Asset Managers Initiative as a founding signatory, pledging to reach net zero by 2050.

Proprietary Climate Ratings that leverage in-house research capabilities are set to be introduced by Fidelity to assess the net zero ambition and alignment of investee companies to minimum ESG standards, and to set targets for the net zero pathway of its funds.

“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 at Fidelity International.

“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.”

The ratings will be rolled out for all companies in Fidelity’s investment universe to identify engagement opportunities in high-impact sectors and set interim targets for 2025. This will be used to ensure all funds that promote environmental or social characteristics and have a sustainable investment objective are aligned with a net zero trajectory by 2050.

Where the ratings determine issuers are not aligned but have a credible transition pathway, Fidelity will aim to enhance its engagement with management and encourage companies to reduce their impact on the planet.

“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,” Tan said.

In addition to bringing forward its goal of reducing company-wide operational carbon emissions to net zero by 2030, Fidelity has also committed to phasing out exposure to the thermal coal sector in OECD countries by 2030 and by 2040 globally.

This gradual exit gives companies the opportunity to demonstrate their willingness to transition, guided by Fidelity’s Climate Ratings and engagement policy.

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