Sustainable, Responsible &/or ESG Policy:

At Fidelity, we believe that sustainable investment makes good business sense and helps to protect and enhance investment returns. Consequently, our investment process takes ESG factors into account as these can have a material impact on investment performance. Our ESG integration occurs across all sectors and markets in which we invest.

The fund seeks to integrate ESG issues in its investment and risk monitoring process to help achieve an overall sustainable investment approach. Ultimately, Fidelity believes that by investing in sustainable companies the fund can generate a positive impact for its investors, but also the wider global economy.

From an ESG perspective, the fund follows a three-part implementation framework:

• Best in class: Invests in best in class issuers as rated by MSCI or by Fidelity proprietary ESG ratings.
• Positive sustainability trajectory: Lower rated issuers must have improving ESG characteristics primarily measured by the Fidelity trajectory indicator.
• Sector based exclusions: As well as Fidelity-wide exclusions, additional exclusions include controversial weapons, semi-automatic weapons, military weapons, thermal coal, tobacco and United Nations Global Compact violations (exclusions for military and semi-automatic weapons, tobacco and thermal coal are based on a 5% revenue threshold and are applied at issuer level).

The fund seeks to achieve its investment objectives while promoting, among other characteristics, environmental or social characteristics, and does so by committing to maintain a minimum of 70% in securities that maintain favourable ESG characteristics*.

*Favourable ESG characteristics are defined by reference to a combination of different measurements such as ESG ratings provided by external agencies or Fidelity ESG Ratings. Further details on the methodology applied are set out at https://fidelityinternational.com/sustainable-investing-framework/ and may be updated from time to time. The Portfolio Managers may use data provided by internal research teams and complemented by external ESG score providers to form an assessment of the favourable ESG characteristics. A maximum of 30% of this fund’s net assets are allowed in issuers that are not deemed to maintain favourable ESG characteristics in accordance with the criteria above, but which demonstrate improving sustainable indicators. Improving sustainable indicators are issuers classified as such through the trajectory outlook of Fidelity ESG Ratings or issuers which in the view of the Portfolio Managers demonstrate the potential for improvement through the implementation and execution of a formal engagement plan. The criteria used to determine this reference rating may change over time and will be updated at https://fidelityinternational.com/sustainable-investing-framework/ accordingly.

Process:

Our investment process draws on our long-standing experience managing fixed income portfolios combined with a proactive integration of best-in-class Environmental, Social, and Governance (ESG) investing. The investment process at Fidelity International (Fidelity) is designed to ensure that the best investment ideas are identified and incorporated efficiently within client portfolios. In order to successfully deliver performance, Fidelity adopts a team-based approach which combines the strengths and skills of four separate disciplines - portfolio management, credit research, quantitative research, and trading. The Fixed Income Team also draws upon the research of our equity and markets research team as well as our ESG Team. These professionals offer unique insight into companies, the economy and markets.

One key aspect of our process is to continuously engage with the companies we invest in. Our equity and credit research analysts are the starting point of ESG engagement with the issuers, and they will flag if there is an area of required engagement. In addition, the ESG Team at Fidelity will also have separate engagement calls and meetings, focusing on our current engagement themes (such as the transition to a low carbon economy, waste and the circular economy, human rights in supply chains, gender diversity on corporate board, data privacy and security, and remuneration). If a company we have selected on the basis of having a credible ESG trajectory fails to meet its objectives, it will become a candidate for exclusion. This is an important element as we believe it is important to maintain high standards relating to all of our selected issuers.

The broader investment process can be broken down into five stages: market assessment, allocation, selection, transaction and risk. 

Stage 1: Market assessment

To assess market conditions, we take a 360-degree view to identify key factors that influence the investment strategy, focusing on areas such as: i) the macroeconomic environment, including monetary and fiscal policies, ii) the political environment, both in the short-term and long-term, iii) sustainability trends, iv) indicators of market sentiment, such as volatility, and v) technical factors, such as market flows or issuance activity.

The fund employs strategic and tactical risk allocations and is populated with bottom-up views, drawing on a mix of quantitative and qualitative research inputs. When making decisions for the portfolios, we combine fundamental and ESG research, with powerful proprietary quantitative tools and specialised trading inputs. We then debate and discuss the focus areas to assess market trends, investor sentiment and the potential catalysts for change, arriving at the overall risk appetite of the portfolio.

The process is formalised via the use of scorecards, generating indicators for the outlook of each asset class across rates and credit. The results then form the strategic anchor of the portfolio, over which tactical views and best ideas at a security selection level are later implemented. 

Stage 2: Allocation

Based on our market assessment, we define where and how we want to allocate risk. The Strategic Asset Allocation (SAA) provides a framework to understand our risk appetite relative to a 'neutral' risk stance in terms of duration, credit risk and volatility. We then have the flexibility to tactically shift risk exposures around this starting point depending on market views and whether the team sees short-term value in a certain opportunity. To do this, we draw on the team’s expectations for interest rates and credit spreads, and our level of conviction in those expectations. We then decide the desired balance between duration and credit risk. Once we have decided on targets for the fund’s volatility, duration, and credit risk, we will begin to look for high conviction trade ideas from across the investment teams to populate the portfolio.

Our targets for duration and credit risk shape the asset allocation decision, by which we mean the decision to invest in government bonds, inflation-linked bonds, investment grade corporate bonds, high yield or emerging market debt, among others. The asset allocation mix is primarily dictated by top-down views from the SAA and our current risk appetite, but can also be influenced by the best ideas from our analysts. 

Research and screening approach

Stage 3: Selection

Once the risk allocation has been defined, the investment team utilises a bottom-up approach to identify and select the best ideas for the investment strategy. Investment ideas are predominantly generated between the Portfolio Managers, credit research, quantitative research and trading. Investment views will incorporate fundamental, sustainability and quantitative analysis, legal analysis of bond structures, market flows and relative valuation to make an informed decision. The key advantage of incorporating the views of multiple groups of experts is twofold: Firstly, it allows us to uncover a broader range of investment opportunities as each group makes recommendations based on a different skill set and approach to the market. Secondly, this approach facilitates a robust mechanism to challenge ideas. Views are debated from various angles, which provides the Portfolio Managers with additional perspectives when making investment decisions. 

Steps of the Selection process

i.Credit research

Fundamental credit research forms the basis of the strategy’s investment process. The Credit Research Team consists of 36* individuals based globally. Fidelity operates a career analyst model with the credit team consisting of a blend of home-grown talent (primarily through the graduate program) and experienced hires.

Credit research analysts are sector specialists, which means their coverage spans geographies, capital structures, ratings and crosses both developed and emerging markets. This provides uninterrupted coverage when a credit makes the transition between high yield and investment grade, or when a merger or acquisition takes place and the target company is re-domiciled. It also ensures analysts have in-depth knowledge of the entire sector and global supply chain. Combined with the research shared from our equity colleagues, this ensures that our analysts have an information advantage over competitors.

Our investment analysts have overall responsibility for analysing the ESG performance of the companies and buildings in which we invest, however, Fidelity also has a dedicated global Sustainability Team that 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.

Our open architecture promotes constant engagement and debate across the entire investment team, with analysts having full visibility on the various investment strategies. The collegiate approach also allows us to learn from each other, create a common language for all members, and build what we believe to be a sustainable investment process that can achieve persistent performance through bottom-up security selection.

*Source: Fidelity International, as at 31 March 2024. Excludes investment graduates and includes Toronto-based analysts, who are part of Fidelity Canada Investment Management (FCIM). FCIM is an affiliated entity of FIL Limited.

The credit research framework incorporates a fundamental assessment, thorough ESG analysis and finally an investment recommendation, described as follows:

a.Fundamental assessment

The sovereign and corporate analysts first provide a fundamental assessment of a country or company’s financial health, resulting in a proprietary credit rating score and outlook. The scale, from AAA to D, is analogous to that of the official rating agencies, although our ratings often differ from the third-party agencies, primarily because ours are more forward looking. Experience has taught us that credit agency ratings are not always timely, tend to be reactive and often reflect obsolete market conditions. The analysts also provide an outlook for the credit profile alongside their fundamental rating to capture any potential improvement or deterioration in the issuer’s balance sheet. However, their ratings and watch lists can serve as a guide, and highlight inefficiencies.

At Fidelity, we believe that socially responsible investing helps to protect and enhance investment returns. Consequently, in conjunction with fundamental analysis, our research process takes ESG factors into account as these can have a material impact on investment performance. Particularly for Fixed Income, where returns are asymmetric, ESG factors present a key sources of downside potential.

For this reason, we launched our proprietary ESG ratings over the course of 2019. Comprising of Fidelity’s equities and fixed income coverage universe of over 4,100 issuers, the sustainable ratings leverage Fidelity’s extensive research capabilities and ongoing engagement with management teams to provide a forward-looking evaluation of a company’s performance and trajectory on ESG-related issues. As our analysts have relationship with C-suite management, visit companies in person and engage with them on an ongoing basis, we feel they are in the most informed position to judge a company from ESG perspective. Our ratings are cross-asset, meaning that our credit analysts and equity analysts, supported by the ESG Team, jointly determine the rating as a forward-looking assessment for the company. This removes subjective bias from the rating process and fosters communication if an analyst wants to change a rating.

The ratings framework divides the investment universe into subsectors, each with industry-specific criteria. For each subsector, the rating focuses on 5 to 10 material ESG issues, selected by the ESG Team and the analysts based on their relevance, materiality and forward-looking nature, against which the issuer is assessed relative to its peers, using an A to E rating, with C being the sector’s average. Whilst an equally-weighted average of the issue-level ratings is automatically provided, analysts have discretion to override the overall rating if they consider that one particular issue may be more prevalent for a company. As the ratings are designed to generate a forward looking and holistic assessment of ESG risks and opportunities, we also ask our analysts to qualify the direction of change of companies’ ESG performance: positive, neutral or negative trajectory. The ratings are then reviewed at least annually but may also be updated on an ad-hoc basis, following a change of policy or an exceptional event at the company.

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

• Changes to regulation (for example, Greenhouse Gas (GHG) emissions restrictions, governance codes).
• Physical threats (for example, extreme weather, climate change).
• Cost implications (for example, arctic mining, product recalls, fines).
• Brand and reputational issues (for example, poor health and safety record, weak labour practices).
• Supply chain management (for example, observation of health, safety and human rights provisions and compliance with the provisions of the Modern Slavery Act).
• Gaining access to raw materials (for example, security of oil supply, conflict minerals, bribery and corruption).
• Product evolution (for example, low energy products, renewable energy).
• Shareholder rights (for example, election of directors, capital amendments).
• Corporate governance (for example, Board structure and diversity, executive remuneration).
• Environmental performance data of buildings (for example, energy and water consumption, GHG emissions and waste).
• Work practices (for example, increase in fatalities, lost time injury rates, labour relations).

The ESG ratings and full company reports are included on our centralised research platform, Fidelity Insight, an integrated database, so that each analyst has a first-hand view of how each company under their coverage is rated according to ESG factors. Moreover, our ratings are included in analyst research notes, which are published internally and form an integral part in the decision-making stage of our investment process. A summary of Fidelity’s ESG framework is located below:

b.Investment recommendation

The last stage of the process involves the analysts applying a ‘recommendation’ in the form of a relative value rating to the issuer, as well as individual bonds outstanding. This ranges from a buy to a sell (1 to 5). The recommendation is designed to inform the Portfolio Managers and help them build conviction. If, for example, a specific bond has rallied significantly in recent months, the relevant analyst might decide to change the relative value of the bond (from buy to sell), but keep the fundamental and ESG rating at an issuer level unchanged. Our credit analysis focuses on the probability of default, given both financial and non-financial factors (and the loss given default), whereas our relative value analysis focuses on relative price/attractiveness, liquidity and the risk premium.

The Portfolio Managers continuously review these issuers theses and price targets, and adherence to investment guidelines as well as the ESG characteristics of holdings within the fund. This includes actively engaging with companies and meeting with senior management representatives.

ii.Quantitative research

The Tactical Quantitative Research Team's approach to trade idea generation is to aim to create ideas, models, scorecards and overlays that are back tested, uncorrelated, timely, automated, and unbiased:

Back-testing: By rigorously testing against historical data, the team aims to;

Rapidly distinguish trading strategies with potential from those that don’t add value.

Set position sizes based on historical data and worst-case drawdown scenarios.

Identify strategies that continue working in diverse environments - both in Quantitative Easing (QE) and non-QE environments or different parts of the macroeconomic cycle.

Diversification: Quants identify, recommend and monitor multiple signals across many different asset classes and from many different sources for a large number of instruments. Combining uncorrelated strategies from areas as different as momentum, mean-reversion, seasonality and yield curve slope reduces risk for a given alpha.

Data: Quants can take advantage of massive data sets. We take into account a wider range of data inputs on every bond in our universe and unearth less-obvious relationship than manual analysis can.

Automation: With increased automation of data processing and analyses, quants can update the analysis of every asset every day. Missed opportunities from delayed analysis as well as mistakes from human error can be reduced using quantitative strategies, and quantitative screens can funnel pre-screened high-potential opportunities to specialists in the Credit Analyst Team for deeper review.

Reduction of behavioural biases: Quantitative strategies can mitigate or eliminate the behavioural biases of manual investing by making the assumptions in our investment process more explicit and by imposing structure on the investment process – and they can help us exploit the biases of other market participants.

iii. Trading input

A key distinction of our fixed income approach is that traders provide the Portfolio Managers with market intelligence, flow information and trade recommendations. Traders are dedicated by asset class which is especially important for markets affected by seasonal liquidity and influenced by technical trends. They ensure efficient and low-cost execution, in addition to providing idea generation based on their market knowledge and experience. The trader’s participation in any pre-trade discussion is vital, as they will know where to source (or find bids) for bonds and will offer alternative trade ideas if the proposed trade pricing becomes prohibitive. Ideas generated by the team tend to be either short-term tactical trades, typically where the idea is flow-driven based on a pricing anomaly, or longer-term and strategic trades, gained through insight from meetings with official institutions such as central banks and issuing agencies.

Traders are also integral to the new issue process, forming opinions on new issue demand, premium and success of a deal. In doing so, traders work in close collaboration with the Portfolio Managers, credit and quantitative analysts to formulate an investment thesis.

Stage 4: Transaction

Transactions are directed by the Portfolio Managers through a global trading platform and implemented by a group of specialist traders in conjunction with the Portfolio Services Group (PSG). There is continuous dialogue between the Portfolio Managers, the traders and PSG as execution is often contingent on market levels. This structure has been established to enable traders to build strong external counterparty relationships, which is crucial for assessing market liquidity and ensuring best execution. PSG further supports the risk management and implementation process by actively monitoring fund investment guidelines and other requirements, such as pre-trade compliance reviews. In addition, the team has different reporting lines, which contributes to the reduction in the overall operational and execution risk by providing an additional and independent layer of control.

Overseeing every transaction is Compliance. The team is responsible for ensuring compliance rules are appropriately maintained and adhered to. They act as a second line of defence against portfolio breaches via rigorous end-of-day testing. Their expertise provides a framework within which the Investment Team can manage complex and bespoke portfolio requirements.

Stage 5. Risk

Portfolio Managers are responsible for building portfolios that are consistent with the risk expectations and investment guidelines of our clients. The balance of risks and positions within a portfolio are analysed daily through the Fund Manager Workbench system. This proprietary tool enables the sources of risk within a strategy to be rigorously analysed and trades to be sized. Our preferred measure of risk for credit portfolios is Duration Times Spread (DTS), but the system also monitors ex-ante tracking error, spread duration and the (real and nominal) interest rate duration of a portfolio, down to the bond and issuer level. It allows a portfolio to be analysed by principal term structure components, as well as by credit rating, industrial sector, derivative and currency exposures. As new trade ideas are communicated to the Portfolio Manager by the relevant analyst, new strategies can be tested within the portfolio through this system.

Investment risk management is an integral part of the investment culture and process. Essentially, our risk processes follow a three lines of defence model in adherence with a robust risk management framework.

First level

Investment team: Portfolio Managers use desktop risk management systems on a daily basis to analyse risk within portfolios. Reports typically include measures of tracking error, volatility, concentration, credit quality and other relevant measures.

Portfolio Managers are responsible for building portfolios that are consistent with the risk expectations and investment guidelines of our clients.

Portfolio Construction and Risk Team: This team helps Portfolio Managers understand and manage the risks associated with their portfolios through the provision of reporting and expertise.

Quarterly Fund Review (QFR): The Chief Investment Officer (CIO) / head of asset class meets with Portfolio Managers to discuss their respective portfolios in detail. During the meeting, factors such as the portfolio’s structure, turnover, trading activity, risk profile, performance, and level of active money are analysed.

Quarterly Sustainability Review (QSR): The QSR is designed to place additional scrutiny on the way that sustainability factors are being integrated and monitored at the fund level. A wider and deeper review of ESG factors, as well as our stewardship activities (including engagement and voting) will thus be formally performed on a quarterly basis.

Second level

Investment Risk Team: This team ensures that material investment risks are adequately covered and understood by senior management and the board. The team provides risk metrics to support Compliance, senior management and other stakeholders.

Compliance: This function reviews all trades daily for asset eligibility and to ensure portfolios stay within their investment parameters. It also monitors trades to ensure best execution in the market, including appropriate pricing and timeliness.

Furthermore, Fidelity operates a network of shared first and second line Investment Risk Committees (IRCs) across the firm to support each asset class and specific investment management teams.

Fund Counterparty Risk Committee (FCRC): The FCRC is responsible for ensuring all risks associated with derivatives and counterparty exposures are continuously assessed and that an appropriate control environment is implemented by line management.

Fund Liquidity Risk Committee (FLRC): The FLRC is responsible for reviewing appropriateness of risk mitigations when Fidelity’s funds exceed agreed internal liquidity thresholds as well as reviewing and approving the Fund Liquidity Risk Framework.

Third level

The Internal Audit function provides an independent review of all risk functions as per regulatory requirements.

Resources, Affiliations & Corporate Strategies:

At Fidelity, we are dedicated to achieving the best possible risk-adjusted returns for our investors. We believe that high standards of corporate responsibility generally make good business sense and have the potential to protect and enhance investment returns. Consequently, we integrate Environmental, Social and Governance (ESG) issues into our research and investment decision-making process; we believe it has the potential to affect the long-term value of the investment.

Our integrated ESG approach is relevant across all asset classes, sectors and markets in which we invest.

ESG integration is carried out at the fundamental research analyst level within our investment teams, primarily through the implementation of Fidelity's proprietary ESG Rating. This rating leverages our internal research capabilities and our engagement with companies to inform our view on a company’s sustainability credentials.

The cornerstone of our investment approach is bottom-up research. As well as studying financial results, our portfolio managers and analysts are dedicated to carrying out additional qualitative analysis of potential investments. They visit companies in person, examining everything that could influence its business, from the shop floor to the boardroom. Customers and suppliers also come in for scrutiny. In this way we can develop a 360-degree view of every company in which we invest and ESG factors are regularly considered in this research process.

Our approach to integrating ESG aspects into our investment processes is detailed in the following policies:

Sustainable Investing Principles (Published 2013, Updated 12/2022)

Our Sustainable Investing Principles sets out the guiding principles and minimum requirements for Fidelity’s sustainable investing activities across all asset classes and geographies.

Engagement Policy (Published 02/2021)

Our Engagement Policy sets out how we undertake stewardship and shareholder engagement across our listed equity and fixed income holdings.

Exclusion Framework (Published 12/2021)

Our Exclusion Framework forms part of our Sustainable Investment Policy and defines the main requirements for an effective exclusion framework applicable throughout the organisation.

Voting Principles and Guidelines (Published 07/2021, updated 03/2023)

Our Sustainable investing voting principles and guidelines provides information on how we exercise ownership rights through voting to improve sustainable business behaviour and client returns.

Climate Investing Policy (Published 10/2021)

Our Climate Investing Policy details how we plan to work with stakeholders to reduce climate risk across all investment strategies in a way that aligns with our foundation in active, bottom-up research.

Nature Roadmap  (Published 11/2023)

Our Nature Roadmap details how we are enhancing the integration of nature into our investment platform to help create a world where both people and the planet can thrive.

Deforestation Framework (Published 12/2022)

Our Deforestation Framework outlines how we engage with stakeholders to address agricultural commodity-driven deforestation risks across our investment strategies, aligned to our active, bottom-up investment approach.

All our sustainable investing related policies and reports are available on our website:

https://professionals.fidelity.co.uk/sustainable-investing/our-policies-and-reports

We use a combination of internal and external resources.

Internal

The bulk of the engagement and analysis is carried out by our research analysts who strive to go beyond studying just financial results and aim to integrate ESG and other factors into a comprehensive perspective. They are supported by our team of 34* sustainable investing specialists who engage with companies on various issues including:

• Corporate governance (for example, board structure, executive remuneration);
• Shareholder rights (for example, election of directors, capital amendments);
• Changes to regulation (for example, greenhouse gas emissions restrictions, governance codes); and 
• Physical threats (for example, extreme weather, climate change, water shortages).

Our sustainable investing specialists engage with senior management of investee companies as well as their Socially Responsible Investment/ESG professionals. 

Proprietary ratings and tools sit at the heart of Fidelity’s sustainable investing approach, facilitating the integration of sustainability in our fundamental research and ensuring a consistent approach. Our suite of proprietary tools include:

• ESG ratings: An assessment 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).
• Climate ratings: An assessment that utilises our fundamental research capabilities to identify climate risks, net zero investments and targets for transition engagement within the Fidelity investment universe. It assesses which companies are in the best position to transition to net zero or have a positive trajectory towards transition. The Climate Rating is designed to complement our broader ESG Ratings, which already incorporate climate change factors.
• SDG tool: An assessment which provides the percentage of an entities or portfolio’s alignment with each SDG, and where relevant the underlying targets and indicators. This provides a quantitative, transparent, and consistent approach to measuring the alignment of portfolios against the underlying targets and indicators behind the SDGs.

External

Fidelity is a signatory to many industry initiatives such as the Principles for Responsible Investing, UK Stewardship Code and the Japanese Stewardship Code. We are also active members of the Asian Corporate Governance Association, Assogestioni, the UK Sustainable Investment and Finance Association, the UK Investor Forum and many other trade and industry bodies around the world.

Fidelity uses a number of external research sources that provide ESG-themed reports, research, ratings and data on themes such as corporate involvement in verified or alleged failures to respect international norms, for example the Ten Principles of the United Nations Global Compact as well as on carbon emission, fossil fuel and power generation. The coverage of companies varies by provider and the providers currently cover more than 10,000 companies globally.

We also subscribe to a number of corporate governance and voting advisory services, including products supported by Institutional Shareholder Services (ISS), Glass Lewis and ZD Proxy Shareholder Services. In addition to these, we leverage information from these providers:

• MSCI: ESG data and indicators, exclusions, non-carbon PAIs, ratings, controversies.
• FactSet: RBICS/GeoRev in portfolio analysis.
• Moody's: EU Taxonomy Data.
• ICE Data Services: avoided emissions.

We constantly explore new data sets and approaches that can provide enhanced insights into companies.

*Source: Fidelity International, as at 30 September 2024. Excludes China AMC resources. 

Sustainability Team

Fidelity's Sustainability Team, part of Fidelity’s broader investment team, comprises sustainability and stewardship professionals with expertise in various subject areas. Consisting of 34* professionals, based in locations across Europe and the Asia Pacific region, the team’s scope now encompasses a wide range of activities related to ESG integration, engagement, policy, product development, sales and marketing, proxy voting as well as corporate sustainability.

The Sustainability Team functions across Fidelity in several ways:

• Collaborates closely with the broader investment team, supporting analysts in producing ESG research and conducting company-specific engagements, driving thematic engagement outcomes with sector analysts' input, and assisting portfolio managers in integrating ESG into their investment processes through proprietary tools, training, and frameworks.
• Works in tandem with the product team to develop sustainable investing frameworks and strategies in compliance with ESG regulations and tailored to diverse investor needs.
• Assists client-facing teams and clients with sustainable investing requirements and needs, including client communications, questionnaires, reporting, and training.

*Source: Fidelity International, as at 30 September 2024. Excludes China AMC resources. 

Oversight of ESG at Fidelity

The following individuals and teams are responsible for maintaining and integrating Fidelity’s ESG policies:

• The board members of FIL Limited (the ultimate holding company of the group known as Fidelity International) are responsible for overseeing and being accountable for sustainable investing. The Sustainability Team provides regular reports to the board on its activities, at least once a year. Any changes or amendments to our Sustainable Investing Principles, including our voting guidelines, are approved by the board.
• In 2017, the company established a Sustainable Investing Operating Committee (SIOC) with the aim of providing thorough oversight of all ESG matters across the company's various jurisdictions and business areas. The committee consists of senior management team members representing all asset classes and convenes monthly to review ESG company policy changes, industry developments, client requirements, new product innovations, and regulatory updates. It also ensures the alignment of all active ESG initiatives across the company. Additionally, ad-hoc meetings may be called to address urgent issues that arise before the next scheduled meeting.
• Andrew Wells - Interim Co-Chief Investment Officer, Fixed Income, Multi Asset and Private Assets and Head of Canada and Niamh Brodie-Machura - Co-Chief Investment Officer, Equities (both members of our Global Operating Committee) have oversight and accountability for our sustainable investing strategy and activities globally.
• Jenn-Hui Tan, our Chief Sustainability Officer, oversees Fidelity’s strategy and policies on engagement, voting and ESG integration across our active product range. He manages our dedicated Sustainability Team that is comprised of 34* sustainable investing specialists, based in London, Singapore, Hong Kong, Shanghai, Melbourne, Sydney and Tokyo, who work closely with the investment management teams globally across all asset classes. They are responsible for consolidating our approach to ESG integration, engagement and voting.
• Our directors of research are directly involved in the implementation of sustainable investing principles and procedures in the company. 
• Fidelity’s research analysts have overall responsibility for analysing and rating the ESG performance of the companies and buildings in which we invest. Our portfolio managers are also active in analysing the potential effects of these factors when making investment decisions, ensuring that each stock in the final portfolio adheres to the strategy’s and clients’ ESG requirements.
• The Compliance Monitoring Team monitors the portfolios with screening criteria systematically through hard-coded restrictions in the investment guidelines.

*Source: Fidelity International, as at 30 September 2024. Excludes China AMC resources. 

Industry collaboration

Fidelity recognises the importance of networks and information platforms to share tools, pool resources, and make use of investor reporting as a source of learning. Fidelity is a member or signatory to the following:

Gender Diversity:

• 30% Club Australia (2021)
• 30% Club Hong Kong (2022)
• 30% Club Japan (2019)
• 30% Club Investors Group (2019)
• 40:40 Vision (2020)
• Bright Network Women in Leadership
• Lord Mayor's Appeal - We Can Be
• Women in Finance Charter (2017)
• Women on Boards (2018)

Social Inclusion and Diversity:

• #10000 Black Interns (2020)
• BBBA Talent Accelerator (2020)
• Black North Initiative
• Black Young Professionals
• Catalyst After School Programme
• Disability:IN (2022)
• Diversity Project
• LGBT Great (2019)
• Lord Mayor's Appeal (2019)
• Minority Supplier Development UK (2020)
• OutBritain (2022)
• President’s Challenge Enabling Employment Pledge and Enabling Mark (2023)
• Race at Work Charter
• Social Enterprise UK (2021)
• Social Mobility Foundation (2021)
• Stonewall (2016)
• Trans in the City (2021)
• Valuable 500 (2019)
• Veteran Owned UK (2021)
• WeConnect International (2021)

Climate Change:

• Asia Investor Group on Climate Change (2020)
• CDP - formerly Carbon Disclosure Project (2019)
• Climate Bonds Initiative (2019)
• Climate Investment Summit (2022)
• Coalition for Climate Resilient Investment
• Global Standard on Responsible Corporate Climate Lobbying (2022)
• Green Finance Industry Taskforce Singapore (2020)
• Glasgow Financial Alliance for Net Zero (2021)
• Institutional Investors Group on Climate Change (2020)
• Investor Agenda (2021)
• Investor Group on Climate Change (2021)
• Net Zero Asset Managers Initiative (2020)
• One Planet Asset Manager Initiative (2021)
• Partnership for Carbon Accounting Financials (2022)
• Point Zero Carbon Programme (2022)
• Powering Past Coal Alliance (2021)
• Transition Pathway Initiative (2021)
• UN Climate Change Conference (2021)

Responsible Investment and Finance:

• Asia Securities Industry and Financial Markets Association (2015)
• Asia Research & Engagement (2023)
• European Sustainable Investment Forum (2017)
• European Public Real Estate Association (2023)
• Hong Kong Green Finance Association (2020)
• International Regulatory Strategy Group
• Investment Association (2010)
• Investor Forum - UK (2014)
• Principles for Responsible Investing (2012)
• The Purposeful Company Task Force
• Responsible Investment Association Australasia (2020)
• Sustainable Trading (2005)
• UK Sustainable Investment and Finance Association (2010)
• World Benchmarking Alliance (2020)

Governance and Corporate Accountability:

• Asian Corporate Governance Association (2004)
• Assogestioni (2007)
• Corporate Governance Forum (2009)
• Hong Kong Principles of Responsible Ownership (2017)
• International Corporate Governance Network (2005)
• Japanese Stewardship Code (2014)
• Taiwan Stock Exchange’s Stewardship Principles for Institutional Investors (2016)
• UK Stewardship Code (2010)

Biodiversity:

• Finance for Biodiversity (2021)
• Finance for Biodiversity Pledge (2021)
• Green Praxis Biodiversity (2022)
• Natural Capital Investment Alliance (2021)
• Taskforce on Nature-related Financial Disclosures Forum (2021)
• The Finance Sector Deforestation Action Initiative (2023)

Other Initiatives and Collaborations:

• Council for Sustainable Business
• Edinburgh Airport Sustainability Pledge
• Environment management system standard ISO 14001 (2023)
• Farm Animal Investment Risk and Return (2020)
• Inspiring More Sustainability (2019)
• Investors Against Slavery and Trafficking Asia-Pacific (2020)
• Maastricht University & GRESB (2021)
• Mental Health First Aid Training (2017)
• WEF Stakeholder Capitalism Metrics (2019)
• WorkWell Leaders (2023)

Dialshifter

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by…

We take a pro-active approach to minimising our own environmental footprint. We are committed to achieving net zero emissions by 2030 for Fidelity International’s operational emissions (including all Scope 1, 2 and 3 emissions we have direct control over). Our focus will be on the reduction of emissions through operational changes and investment in operational efficiencies, on-site renewals and purchasing of renewable energy whilst offsetting those we are unable to eradicate.

The goal at Fidelity is to conduct current and future business operations in a sustainable manner which helps create a better future for the environment. Fidelity ensures Environmental Sustainability is managed as any other critical business activity in an integrated, systematic way. The framework is designed to ensure Pollution Prevention, Carbon Reduction, Waste minimisation, responsible use of resources and compliance with legislation through good practice and continuous improvement.

Fidelity’s Commitment: 

• Manage Environmental Sustainability requirements in a systematic way aligned to the environmental management system standard ISO 14001;
• Develop carbon, Natural Resources and Waste data systems to effectively monitor and analyse performance; 
• Continuous improvement through setting realistic objectives to ensure sustainability management is improved in line with resources;
• Complying with legal and other mandatory requirements in relation to sustainability issues;
• Providing adequate control of environmental risks arising from our work activities and operations, including Pollution Prevention;
• Develop an environmentally sustainable culture where every employee can contribute towards Fidelity International goal to create a better future for the environment;
• Ensure effective communication and consultation on Environmental Sustainability with employees keeping them informed, motivated, and suitably trained;
• Ensure that business strategies, via the Environmental Sustainability Group, integrate Environmental Sustainability requirements;
• Reduce our consumption of resources (energy, water, materials, packaging), where feasible;
• Minimise Waste through a commitment to the Waste hierarchy to reduce, re-use, recover or recycle Waste, where feasible;
• To pursue Energy Efficiency in the design, maintenance, management and operation of our owned/operated buildings;
• Seek to use products that have the least possible environmental impact; and
• Reviewing and revising this policy, as necessary, at regular intervals.

Reports on environmental performance are produced covering a range of areas including energy management, carbon footprint, waste reduction, water usage and recycling. This data is collated on a monthly basis and communicated to Senior Management on a regular basis.

Our environmental management policy is based around our ability to obtain regular, accurate information on our environmental performance, not only in energy use and waste management, but also areas such as monitoring our carbon emissions in (for instance) air travel.

We receive regular reports from our incumbent service providers, and collate these for review. We then hold regular meetings with them to investigate areas for improvement. Where the meetings produce ideas which may help reduce the environmental impact of our operations, they are implemented and monitored. Where successful, they are incorporated into our procedures.

Fidelity’s corporate sustainability team have initiated carbon footprinting for a number of offices in recent years and are consolidating that in 2020 to produce global carbon emissions for Fidelity’s activities.

SDR Labelling:

Not eligible to use label