Fidelity International has introduced new policies on climate change and gender diversity to hold investee companies accountable for failing to address those challenges.
The firm published the Sustainable Voting Principles and Guidelines which would cover 12 topics focusing on key environmental, social and governance (ESG) areas detailing summary voting principles and Fidelity International’s expectations for its investee companies.
Under the new global voting guidelines, Fidelity would call for investee companies to reach 30% board gender diversity target in most developed markets and 15% in all other markets globally.
“At Fidelity, we believe that exercising our ownership rights by voting at company meetings is a fundamental responsibility for shareholders,” Jenn-Hui Tan, global head of stewardship and sustainable investing, Fidelity International, said.
“Through the use of engagement and voting, we aim to improve the governance and sustainability behaviours of our investee companies.”
The firm recognised climate change posed one of the most significant risks to the long-term profitability and sustainability of companies and in order to limit global warming to no more than 1.5 °C above pre-industrial levels, the global economy would need to go through a radical transformation, affecting most areas of human activity.
Following that, Fidelity would expect investee companies to take action to manage climate change impacts and reduce their greenhouse gas (GHG) emissions and make specific and appropriate disclosures around emissions, targets, risk management and oversight.
The firm said that from 2022, where companies fall short of its minimum expectations, it would vote against company management.
As far as gender diversity of the board was concerned, Fidelity would actively engage and consider voting against company management in most developed markets that did not have at least 30% female representation on the board of directors.
Following this, in markets where standards on diversity were still developing, an initial 15% threshold was targeted.
“An increasing body of research has shown that organisations that promote diversity are more productive and better performing,” Paras Anand, chief investment officer - Asia Pacific, Fidelity International, said.
“We know from our own company that a diverse and inclusive workplace brings benefits for our customers, our business and our people. At Fidelity, we are committed to actively engaging with our investee companies in the UK and globally; driving them towards more ambitious gender diversity goals, and ensuing we are holding them to account where our expectations are not met.”