Asset manager Fidelity International plans to expand its range of sustainable strategies to cover nature-related themes including oceans and water.

The UK-headquartered company is building a “suite” of strategies aligned with EU’s Sustainable Finance Disclosure Regulation (SFDR) most sustainable classification of Article 9.

“We aim to keep expanding our range of Article 9 and other sustainable thematic investment strategies, covering a broader spectrum of geographies, asset classes including real estate and private credit, and nature-related themes such as oceans and water,” Fidelity said in a nature roadmap.

The suite covers global equities and fixed income across US, Asia, and Europe, it said. The investor would not share any further details on the water-related strategies with Carbon Pulse.

Water is a driver of “material impacts and dependencies across our strategies”, Fidelity said.

“As such, we are evolving our stewardship approach to water and aim to formalise our approach, identifying priority sectors and issuers and clear investor expectations, against which we can monitor engagement progress and management of water-related impacts and dependencies across our engaged investments.”

The investor mapped the materiality of its impact drivers with the Exploring Natural Capital Opportunities, Risks, and Exposure (ENCORE) tool this year.

Fidelity already has a ‘Sustainable Water & Waste Fund’, launched in 2018, which managed almost $1.8 billion as of the end of September.

BANK ENGAGEMENT

The investor, which manages $714 bln in assets, plans to vote against board members of banks should they fail to meet its minimum deforestation-related expectations.

Fidelity will target executives at “globally systemically important banks and banks located in high deforestation risk markets”, it said.

Key factors in its voting will include institutions’ deforestation-related exposure, geographical footprint, and engagement.

“We believe that financial institutions with material exposure to deforestation via their financing activities should recognise deforestation as a material business risk,” Fidelity said.

“In time, we will increase our expectations of companies and financial institutions in line with emerging best practice.”

Fidelity reiterated that it would vote against corporations from 2024 on the basis of deforestation inaction.

The investor has conducted an initial assessment of exposure to deforestation risk of high-risk companies in palm oil, soy, beef and leather, and pulp and paper sectors.

Other key focus engagement areas for nature include the Business Coalition for a Global Plastics Treaty and the food sector, it said.

Fidelity’s deforestation roadmap:

Source: Fidelity International’s Nature Roadmap

By Thomas Cox – t.cox@carbon-pulse.com

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