Engaging and voting on financially material ESG issues reflect our belief that active ownership can contribute to the long-term sustainability of a company and positive investor returns. Our clients expect us, as the stewards of their capital, to steer companies towards the right business decisions and influence corporate behaviours that will help build and protect investment returns.
New policies on climate change and gender diversity
To this end, we are moving to introduce new policies on climate change and gender diversity. As part of this, we will engage with companies on climate change and gender diversity issues, which are, in our view, material environmental and social concerns that need urgent and significant improvement. We will not support boards where companies do not meet our expectations.
On climate change, our voting policy is designed to support the implementation of the Paris Agreement and limit global warming to well below 2°C. We expect our investee companies to take action to manage climate change impacts, reduce their greenhouse gas emissions and make specific and appropriate disclosures around emissions, targets, risk management and oversight.
Starting in 2022, we will begin to vote against directors at companies that do not meet our minimum climate change-related standards, taking into account if they are in industries most affected by climate change and the degree of urgency with which we believe they should be addressing these issues.
On gender diversity, our voting policy is designed to encourage gender balanced boards and takes into account the recommendations of key initiatives on female representation. We expect our investee companies to establish and uphold comprehensive and effective diversity and non-discrimination policies; regularly review their hiring and promotion practices to ensure against bias, and to set ambitious diversity targets appropriate to the business, demonstrating alignment with our belief that diversity helps deliver long-term shareholder value.
Where companies fall short of our minimum expectations of having at least 30% female board representation in the most developed markets and 15% in all other markets, we will vote against management.
Each investment decision we make has consequences for client portfolios and for society as a whole. Potential long-term financial and societal implications must therefore be considered. We believe that ultimately our own and our clients' goals are fundamentally aligned with those of society, and we must ensure that we represent them in the best way possible.
At Fidelity, we believe that exercising our ownership rights by voting at company meetings is a fundamental responsibility for shareholders. We see voting and engagement as key tools to improve client returns, improve sustainable business behaviour and advance our purpose to build better financial futures. As such, these enhanced policies highlight our commitment to holding companies to account and driving positive change on key sustainability issues.
This article focuses on the key aspects of Fidelity's 2021 Sustainable investing voting principles and guidelines. You can access the full report by clicking here.
This content is for investment professionals only and should not be relied upon by private investors.
The value of investments (and the income from them) can go down as well as up and you may not get back the amount invested. Past performance is not a reliable indicator of future returns. Investors should note that the views expressed may no longer be current and may have already been acted upon. A focus on securities of companies which maintain strong environmental, social and governance (ESG) credentials may result in a return that at times compares unfavourably to the broader market. No representation nor warranty is made with respect to the fairness, accuracy or completeness of such credentials. The status of a security's ESG credentials can change over time. Changes in currency exchange rates may affect the value of investments in overseas markets. Investments in emerging markets can also be more volatile than other more developed markets. Reference in this document to specific securities should not be interpreted as a recommendation to buy or sell these securities, but is included for the purposes of illustration only. Issued by Financial Administration Services Limited and FIL Pensions Management, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM1021/37037/SSO/NA