Fidelity International has introduced new global policies on climate change and gender diversity that will see it increasingly hold investee companies to account on environmental and social issues which require "urgent and significant improvement".
The asset manager set out the new policies in its Sustainable Investing Voting Principles and Guidelines published today (26 July), stating that it will "not support boards where companies do not meet our expectations".
On the issue of climate change, Fidelity said that it expects the companies it invests in to take action to manage climate change impacts and reduce their greenhouse gas (GHG) emissions, and also make "specific and appropriate disclosures" around emissions, targets, risk management and oversight.
It impacts the very nature of major industries in which we invest, and as such must be high on the agenda of all companies."
Any companies that fall short of its minimum expectations can expect that from 2022, Fidelity will vote against company management.
In an effort to drive more ambitious gender diversity goals, Fidelity has called for investee companies to reach a 30% board gender diversity target in most developed markets and said that it will "actively engage and consider voting against" company management in most developed markets that do not have at least 30% female representation on the board of directors.
In markets where standards on diversity are still developing, it is targeting an initial 15% threshold.
Jenn-Hui Tan (pictured), global head of stewardship and sustainable investing at Fidelity International, said that the message it is sending to companies is that "the climate crisis must not and cannot be ignored".
"It impacts the very nature of major industries in which we invest, and as such must be high on the agenda of all companies. At Fidelity, we're working collaboratively with peers in the Net Zero Asset Managers initiative, supporting and the transition towards global net zero emissions," he added.
"We expect investee companies to do the same and have policies in place to reduce carbon and other greenhouse gas emissions. This includes setting and reporting on ambitious targets aligned to the UN's Paris Agreement on climate change, including an approach to net zero."
Tan said that through the use of engagement and voting, its aim is to improve the governance and sustainability behaviours of investee companies.
Paras Anand, CIO, Asia Pacific at Fidelity International, added: "An increasing body of research has shown that organisations that promote diversity are more productive and better performing. We know from our own company that a diverse and inclusive workplace brings benefits for our customers, our business and our people".
The Sustainable Voting Principles and Guidelines cover 12 topics and are focused on key ESG areas detailing summary voting principles and Fidelity International's expectations for its investee companies.
First published by our sister title Investment Week