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Sustainable Investing Framework
Sustainable Investing Principles
Our Sustainable Investing Principles document (SI Principles) aims to set out the guiding principles and minimum requirements for sustainable investing activities across Fidelity. It is reviewed and updated on a regular basis. The SI Principles start with our Sustainable Investing Beliefs: the foundation of Fidelity’s approach to sustainable investing. The SI Principles build on our beliefs to set out our sustainable investing frameworks, our approach to sustainable client solutions, exclusions, investment stewardship and engagement, the integration of ESG risks and opportunities across our investment management process, and an overview of compliance with regional sustainability regulations.
For more information, download our SI Principles.
Key Requirements for Fidelity’s SFDR Article 8 and 9 product range:
Fidelity’s Article 8 & 9 product range is a range of products with a focus on environmental, social and governance (ESG) factors. This product range includes a number of products with enhanced ESG features (the Sustainable Fund Family). The Fidelity’s Article 8 & 9 product range has an ESG investment approach driven by selecting issuers with favourable and/or improving ESG characteristics, whilst aiming to achieve long-term financial performance. This ESG approach may be different for certain products, including index-tracking ETFs, article 9 funds and private asset products. Please see the relevant offering documents for those individual products to confirm their ESG approach.
Absolute ESG Rating or ESG Trajectory
Favourable ESG characteristics are defined as issuers rated by MSCI, or in the absence of a rating from MSCI, by the Fidelity ESG Rating, as follows:
- Developed market issuers with an ESG rating from MSCI of AAA - BBB
- Non-developed market issuers with an ESG rating from MSCI of AAA - BB
- Issuers with no ESG rating assigned by MSCI will be assessed by Fidelity ESG Ratings and are required to have an ESG rating of A - C
Global market classifications are as set out in MSCI’s annual market classification review.
Fidelity’s Sustainable Family fund range must invest minimum 70% of net assets is issuers with Favourable ESG characteristics as defined above. Issuers that do not meet this requirement may remain eligible for investment by SF funds (up to 30% of investments) if they are assessed as possessing or demonstrating potential for improvement. There must be a formal engagement plan with the issuer which demonstrates the potential for improvement, provided that this engagement must result in an improvement in the ESG characteristics of the issuer within 18 months of the initial purchase of the security (disregarding subsequent trading activity). This requirement does not apply to sustainable ETFs, SF S&MA funds, or instruments issued by sovereign issuers. Specific fund types such as money markets funds, multi-asset funds, ETFs, private credit and real estate funds have alternative treatments to reflect their respective investment strategies and asset class; however, all follow the overall philosophy of Fidelity’s SF of predominantly having investments in issuers with favourable or improving ESG characteristics.
Although Fidelity’s fundamental investment philosophy is to favour engagement over exclusion and that exclusion should be treated as a matter of last resort, we will consider the exclusion of companies from our investment universe based on specific ESG criteria. We adopt a principles-based approach to sustainability matters, and as part of this, we place issuers which we regard as unsuitable investments on our exclusion lists. When deciding on whether to exclude an issuer we are guided by international conventions, guidance from the United Nations, and other global regulations which uphold ESG principles.
The Fidelity exclusions framework is built on three layers.
Firstly, a Firmwide Exclusion Framework is applied to all our actively or systematically managed funds in all asset classes and segregated mandates (unless specified in the relevant offering documents or agreed otherwise with the client) by screening using our Firmwide Exclusion List. The policy may not be applied to sub-advised funds. More details on our Firmwide Exclusion Framework are provided here.
Secondly, additional exclusions are being applied to Fidelity’s SFDR Article 8 funds which are not part of the Sustainable Fund Family. These funds exclude issuers for failure to conduct their business in accordance with accepted international norms (behavioural exclusions). More details on this exclusion framework and a list of funds with additional fund level exclusions can be found here.
Lastly, additional enhanced exclusions are being applied to Fidelity’s SFDR Article 8 and Article 9 funds which are part of the Sustainable Fund Family. These funds also exclude issuers for three reasons:
- for failure to conduct their business in accordance with accepted international norms (behavioural exclusions) or,
- for their involvement in activities or product categories which are unsustainable and cause significant harm (fundamental exclusions).
- Countries that are performing poorly on three principles relating to governance, respect for human rights and foreign policy (sovereign exclusions)
More details on this exclusion framework and a list of funds with additional fund level exclusions can be found here.
This document may not be reproduced or circulated without prior permission. This document is intended only for persons or entity to which it is addressed. Fidelity International refers to the group of companies which form the global investment management organisation that provides information on products and services in designated jurisdictions outside of North America. This communication is not directed at, and must not be acted upon by persons inside the United States. Fidelity only gives information about its own products and services and does not provide investment advice based on individual circumstances, other than when specifically stipulated by an appropriately authorised firm, in a formal communication with the client. Fidelity, Fidelity International, the Fidelity International logo and F symbol are registered trademarks of FIL Limited.
Third party trademark, copyright and other intellectual property rights are and remain the property of their respective owners.
The information presented in this document is for information only. It is a general disclosure on the investment approach and should not be considered as (i) investment advice, (ii) an endorsement or recommendation in a financial product or service, (iii) an offer to sell or a solicitation of an offer to purchase any securities or other financial instruments. Unless otherwise stated all views expressed are those of Fidelity International.
Issued by: FIL Pensions Management (authorised and regulated by the Financial Conduct Authority in UK), FIL (Luxembourg) S.A. (authorised and supervised by the CSSF, Commission de Surveillance du Secteur Financier), FIL Investment Switzerland AG and at FIL Gestion, authorised and supervised by the AMF (Autorité des Marchés Financiers) N°GP03-004, 21 Avenue Kléber, 75016 Paris. For German Wholesale clients issued by FIL Investments Services GmbH, Kastanienhöhe 1, 61476 Kronberg im Taunus.
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For German Pension clients issued by FIL Finance Services GmbH, Kastanienhöhe 1, 61476 Kronberg im Taunus.
Asia and Australia
In Hong Kong, this material is issued by FIL Investment Management (Hong Kong) Limited and it has not been reviewed by the Securities and Future Commission.
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In Australia, this material issued in Australia by Fidelity Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).
In China, Fidelity is authorised to manage or distribute private investment fund products on a private placement basis, or to provide investment management service to institutions in the mainland China solely through its Wholly Foreign Owned Enterprise in China - FIL Investment Management (Shanghai) Company Limited.
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