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ESG statement

This information is for investment professionals only and should not be relied upon by private investors.

Is ESG integrated into your investment process? How? Which funds or does this apply to the entire firm?

At Fidelity, we have developed an approach to sustainable investing that is built on three related elements: integrated sustainability analysis, corporate engagement and collaboration.

  • Through our bottom-up research process we gain an in-depth understanding of sustainability issues at a company level. Our assessment of companies’ sustainability metrics is integrated throughout the investment process – and across asset classes – through our own Sustainability Ratings. These ratings are solely for the use of Fidelity’s investment teams and are informed by more than 180 analysts around the world who participate in around 16,000 company meetings a year.
  • We believe engagement is key to improving corporate behaviours over the long-term. Active engagement forms an integral component of our sustainable investing strategy. For this to be meaningful, it must go beyond simply sending an email to a generic company inbox. Our approach adds value by demanding direct dialogue with leadership teams, working closely with other stakeholders for maximum impact and, where necessary, employing the use of proxy voting and shareholder resolutions to improve practices.
  • It is only by collaborating with others that we can deliver improved sustainability outcomes for our investors. We work closely with policymakers, industry groups and non-governmental organisations to improve sustainable behaviours by businesses around the world. We are actively working to encourage policymakers to make company sustainability disclosures the norm in every region of the world, although we appreciate that we will achieve this more quickly in some jurisdictions than others.

Each of these elements is designed to help identify companies which operate with high standards of corporate responsibility. Different funds will have varying levels of focus on sustainability within the investment process, with the strongest application of the approach within our Sustainable Family of Funds.

We believe that these three elements complement each other and increase our likelihood of success in enhancing investment returns for our clients.

Who conducts ESG analysis within the team? Is it done by PM, financial analysts or a central ESG team?

There are four important inputs into our sustainable investment analysis of the companies we research: our analysts, our portfolio managers, external research and our specialist Sustainable Investing Team.

Our teams work together to assess and review the sustainability issues affecting each individual asset at the security level, alongside traditional financial metrics. We have invested considerably in developing our own Sustainability Ratings system, which provides a comprehensive and unique mine of information, from analyst insights to engagement reports from the work we do with investee companies.

Where helpful, to complement this proprietary analysis, we also have an array of additional research and ratings information available, which we source from external third parties. Our analysts are encouraged to explore any material differences between their internal ratings of companies and the external ESG ratings provided by third-party research agencies.

While our analysts have overall responsibility for analysing the environmental, social and governance performance of the companies in which we invest, our Sustainable Investing Team works closely with the investment teams and is responsible for consolidating Fidelity’s approach to stewardship, engagement, ESG integration and the exercise of our votes at general meetings.

Please summarise the key ESG metrics that are core to your strategy?

We have developed our own Sustainability Ratings, which leverage our internal research and interactions with companies to generate a forward-looking assessment of a company’s ESG performance and its trajectory. These ratings are based on the following principles:

Focusing on material issues

The rating focuses on 5 to 10 material ESG issues for 99 different subsectors. The list of ESG issues have been selected by the Sustainable Investing Team and the analysts based on their relevance, materiality and forward-looking nature.

Leveraging internal research capabilities

When rating companies, equity and fixed income analysts work together and consider the following components:

  1. Awareness: Is the company aware of its material risks? Are commitments to address these risks institutionalised across its operations?
  2. Action: How well does the company implement its policies to address key risks/take advantage of opportunities?
  3. Results: How effective are the company’s policies and programs in practice? Has the company been subject to significant controversies?

Analysts then assign an overall A to E rating (C being understood as the sector average) for each rated name on a sector relative basis. Whilst an equally-weighted average of the issue-level ratings is automatically provided, analysts have the discretion to override the overall rating if they consider that one particular issue may be more prevalent for a company.

Providing a forward-looking assessment 

The rating is designed to generate a forward-looking and holistic assessment of ESG risks and opportunities. Analysts qualify the direction of change of companies’ ESG performance (positive, neutral or negative trajectory).

Incorporating engagement insights

Where the information is not available due to a lack of disclosure, analysts are encouraged to contact the company and ask questions about these issues to complete their assessments. Our analysts conduct about 16,000 company meetings a year and regularly use these meetings to gain information about companies’ ESG management.

We have developed an ‘ESG Rating App’ available to the investment team on our internal research system Insight. Analysts use the ESG Rating App to populate the ratings and record their commentaries. They can also flag companies they consider as good candidates for engagement. Names rated below C are automatically flagged for our Sustainable Investing Team to follow up with the company.

How is this research carried out? Positive/negative screening? Qualitative?

We have developed a series of qualitative questions designed to capture how well a company proactively manages the sustainability issues that are the most material to its business. This helps us to determine which companies are following best practice and which are laggards.

Examples of factors that our investment teams may consider as part of their company and industry sustainability analysis include:

  • Corporate governance (e.g. Board structure, executive remuneration)
  • Shareholder rights (e.g. election of directors, capital amendments)
  • Changes to regulation (e.g. greenhouse gas emissions restrictions, governance codes)
  • Physical threats (e.g. extreme weather, climate change, water shortages)
  • Brand and reputational issues (e.g. poor health & safety record, cyber security breaches)
  • Supply chain management (e.g. increase in fatalities, lost time injury rates, labour relations)
  • Work practices (e.g. observation of health, safety and human rights provisions and compliance with the provisions of the Modern Slavery Act).

We believe a ‘best practice’ sustainable company has the following attributes:

  • It discloses relevant sustainability information, key performance indicators, milestones and targets at least annually;
  • It has effective management systems in place to address sustainability risks, including external certifications and audits;
  • It considers strategic sustainable opportunities;
  • It has not been involved in significant sustainability controversies or risk events;
  • It has strong management oversight and understanding of material sustainability risks and opportunities.

A ‘laggard’ sustainability company, on the other hand, will likely display the following characteristics:

  • It has limited sustainability disclosure, if any, and does not provide sustainability KPIs or targets;
  • It does not have sufficient systems and policies in place to address and mitigate sustainability risks, perhaps evidenced by frequent involvement in controversies;
  • It has limited management oversight of sustainability issues.

How do you measure your success regarding ESG? Performance against benchmarks (which ones)? Reports?


The first nine months of 2020 were characterised by the Covid-19 crisis. This period contained the first broad-based market crash, and recovery, of the sustainable investing era, and so provided fertile ground for research into the relationship between sustainability and performance.

To this end, we recently carried out a performance comparison across 2,659 companies covered by our equity analysts, and 1,450 in fixed income, using Fidelity’s Sustainability Ratings. We found that the strong positive correlation between a company’s relative market performance and its ESG rating held firm across the longer nine-month time frame.

Our research suggests that the market does discriminate between companies based on their attention to sustainability matters across a range of conditions. This supports our view that sustainability should be at the heart of active portfolio management and that a company’s focus on sustainability is fundamentally indicative of its board and management quality.

More information on this research can be found on our website here.


For each of our engagements we define clear goals, objectives and milestones.  These are recorded in our engagement app and are regularly monitored to ensure that progress is being made and that our engagement is having an impact.

Fidelity measures its success by evaluating a company’s progress toward goals identified at the outset of an engagement. Objectives and time horizons for improvement vary by engagement. Desired outcomes commonly involve improved disclosure on material ESG issues; the development or improvement of a policy or management system; improved performance and/or performance measurement. Intermediate milestones are set to measure progress toward these goals.

Is your business a signatory to PRI? Why, why not?

Fidelity became a signatory to the Principles for Responsible Investment (PRI) in October 2012. As signatories to the PRI, we are required to submit an annual report detailing how we incorporate ESG into our investment analysis across asset classes. We completed our latest submission in March 2020 and our RI Transparency Report (showing the responses we submitted in the report) is now publicly available on their website –

The results of our latest Assessment Report, which demonstrates how we have progressed in our ESG activities and how we compare to our peers, show that we maintained our A+ score across all the reported categories. We have outperformed the median in relation to all the categories we reported on. We have been rated as an industry leader in ESG integration by the PRI and have outperformed the median for the last six years.

Our 2020 results for each section we submitted are detailed below together with our 2019 and 2018 results and the median scores:

Module  2020 Score  2020 Median  2019 Score  2019 Median  2018 Score  2018 Median 
Strategy & Governance  A+ A A+ A A+ A
Listed Equity – Incorporation  A+ A A+ B A+ B
Listed Equity – Active Ownership  A+ B A+ B A+ B
Fixed Income – Corporate Non-financial  A+ B A+ B A+ B
Fixed Income – SSA  A+ B A+ B A+ B
Fixed Income – Corporate Financial  A+ B A+ B A+ B
Fixed Income – Securitised  A+ B A+ C A+ C

Source: Fidelity International. Rating was assessed in 2020 by the PRI and was based on company data as at 31 December 2019. Range of ratings go from E to A+.

Are you disclosing climate change policies in line with the Task Force on Climate-Related Financial Disclosures (TFCD)? Please briefly outline your policies.

Fidelity has been a supporter of the Task Force on Climate-related Financial Disclosures (TCFD) from its early stages. Although we are a private company and do not have public shareholders or disclosure requirements to the same extent as public companies, we believe that it is as important for us to perform as highly against the broad spectrum of ESG principles as the clients we serve and companies in which we invest.

Therefore, just as we encourage and support our investee companies to report according to the TCFD recommendations, so too we published our inaugural TCFD report in 2020. In this first report, we published the relevant global climate-related information that will help stakeholders better understand Fidelity’s alignment with TCFD reporting, both as a corporate entity in our own right and as an investment manager. A full copy of our TCFS report is available online here.

We endeavour to address the TCFD’s 11 core climate-related disclosure recommendations for all companies with respect to our own corporate operations, along with the additional five disclosure recommendations for asset managers with respect to our investment management process. We have labelled each recommendation as clearly as possible, based on the four “pillars” of TCFD recommended disclosures, namely: Governance; Strategy; Risk Management and Metrics and Targets.

We have found the process of TCFD reporting to be extremely valuable in raising our awareness of areas for improvement. We intend to close the gaps revealed through this year’s reporting process as we move forward.

Has your business signed up or committed to any other campaigns relating to ESG?

We are currently leading a group of 85 investors, representing over $2trillion in assets, to urgently address an unfolding humanitarian crisis, where over 400,000 seafarers are stranded at sea due to Covid-19. A further 400,000 seafarers remain ashore waiting to relieve them, often with little or no pay. The International Chamber of Shipping has estimated that the number of seafarers affected could soon reach one million if this issue is not addressed urgently.

This issue is presenting significant health and safety concerns to the already elevated stress seafarers are facing and has the potential to result in major safety risks when exhausted seafarers handle dangerous or perishable cargoes. The environmental consequences of a serious maritime accident involving these cargoes could be catastrophic for our oceans and our security.

In an open letter to the United Nations, and in consultation with key marine organisations. we called for a number of measures to be put into effect. All signatories have agreed to engage relevant portfolio companies to communicate their expectations around these measures. A copy of the letter can be found here.

Additional examples of collaborative engagement groups we are involved include, but are not limited to: Climate Action 100+; Farm Animal Investment Risk and Return; Find It, Fix It, Prevent It; Net Zero Asset Managers Initiative and the UK Sustainable Investment and Finance Association.


Important information:

The Investment Managers’ focus across the Fidelity Sustainable Family of Funds range on securities of companies which maintain strong environmental, social and governance (“ESG”) credentials may result in a return that could, at times, compare less favourably to similar products without such focus. The status of a security’s ESG credentials can change over time. Investments should be made on the basis of the current prospectus, which is available along with the Key Investor Information Document and annual and semi-annual reports, free of charge on request by calling 0800 368 1732. Issued by FIL Pensions Management, authorised and regulated by the Financial Conduct Authority and by Financial Administration Services Limited, authorised and regulated by the Financial Conduct Authority. Fidelity, Fidelity International, the Fidelity International logo and F symbol are trademarks of FIL Limited. UKM0121/SSO/33011/1221


A part of the Mark Allen Group.