DeVere pledges to double advised ESG funds, Fidelity targets portfolio emissions cuts

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DeVere pledges to double advised ESG funds, Fidelity targets portfolio emissions cuts

DeVere Group has announced that it will double its commitment on positioning assets under advisement into environmental, social and governance (ESG) investments, while Fidelity International has committed to 50% CO2 emissions cuts across its portfolios by 2030.

At the beginning of the year, deVere Group, said it would aim to have $1bn in socially responsible investment vehicles within five years. Its target is now "$2bn or more" within the same time frame.

DeVere's and Fidelity's pledges comes as world leaders, industry chiefs and experts head to Glasgow this weekend for the start of COP26, an event seen as a critical turning point in the struggle to avert the worst effects of climate change.

As a society, we have a small window of opportunity to slam on the brakes to save our planet."

CEO and founder of deVere, Nigel Green, says: "Climate change - and the major, far-reaching fallout of it for economies and communities around the world - is the greatest risk multiplier. There's no question that it is the defining issue of our time.

"In the 2020 annual risk report from the World Economic Forum (WEF), the top five risks in terms of probability were environmental, and the top four of five risks in terms of impact were both social and environmental in nature.

"Our climate is changing at a quicker rate than previously predicted. We're already noticing the impacts of human-created global warming."

He continues: "As a society, we have a small window of opportunity to slam on the brakes to save our planet.

"But this takes determination, honesty and resources. It requires unprecedented levels of investment, which is why deVere is now aiming to position $2bn into ESG investments within five years."

The deVere CEO and founder says the new target is achievable as investors, keen to get ahead of the curve "as well as earn profits with purpose", are receptive to the opportunities as the world scrabbles to mitigate the environmental, economic and social fallout of the current situation - "a situation which is likely to be a constant risk."

In addition, the latest research "underscores that the majority of environmental, social and governance investments are continuing to outperform their non-sustainable counterparts and have lower volatility."

Meanwhile, Fidelity International has committed to reduce CO2 emissions across its portfolio by 50% by 2030 and will introduce proprietary climate ratings to "guide this process".

The asset manager, which has total client assets of $787.1bn, also committed to phasing out exposure to the thermal coal sector in OECD countries by 2030, and by 2040 globally.

The new climate ratings will use Fidelity's in-house research capabilities to assess the net-zero ambition and alignment of its investee companies, and will help establish targets for the net zero pathway of its funds.

The ratings will be used in conjunction with the enhanced voting practices that the asset manager revealed earlier this year.

Jenn-Hui Tan, global head of stewardship and sustainable investing at Fidelity International, said: "As a responsible investor, we must understand the carbon footprint of the portfolios we manage for our clients and work with the companies we invest in to reduce emissions in alignment with global net-zero targets."

Climate ratings will be applied to all companies in Fidelity's investment universe and integrated into all investment decisions.

The initial phase of this process will use the ratings to identify engagement opportunities in "high-impact" sectors and to set interim targets for 2025 and beyond to ensure that all funds which promote environmental or social characteristics and those with a sustainable investment objective are aligned with a net-zero trajectory by 2050.

Fidelity will enhance its engagement with management in instances where issuers are assessed to be not aligned, but do have a "credible transition pathway".

"Fidelity invests in many of the world's leading companies and we want to use our influence as active stewards of capital to help the world meet its climate goals. This long-term, engagement-led policy aims to hold businesses to account for their carbon footprint and ensure that transparent public markets are a powerful force for decarbonisation," said Tan.

Fidelity called its policy on thermal coal a "gradual exit" in order to give companies time to demonstrate their ability to transition, taking an approach that will also be guided by its climate ratings and engagement policy.

The asset manager has pledged to divest from companies that do not show progress towards net zero in a timeframe not exceeding three years.

Tan said: "Immediately exiting our exposure to more carbon-intensive companies will diminish the impact we can make through active engagement and is unlikely to make a difference to real-world emissions nor will it address the energy needs of many countries today."

Earlier in the year, the asset manager brought forward its goal to reduce company-wide operational carbon emissions to net zero by 2030.