Fidelity - ESG: the key role of asset managers

Being truly active asset managers means engaging with companies to guide them towards virtuous behaviour, make them resilient over time and thus build positive returns over the long term.

Alberto Chiandetti, Fidelity, 28 Mag 2021 - 16:25

The integration of factors beyond traditional financial indicators has always played an important role in stock selection for a better risk management. Being truly active asset managers means engaging with companies to guide them towards virtuous behaviour, make them resilient over time and thus build positive returns over the long term.

Although today it is considered a novelty, the ESG theme is not a complete break with traditional long-term fundamental investment processes. The idea that higher returns go hand in hand with companies run by teams of managers who make a good judgment of business risks and pay attention to the wider social good has always been accepted by big investors. Today, the ESG theme and its equivalent terms such as sustainable capitalism or stakeholder capitalism have only become a permanent and indispensable feature of the investment landscape and the corporate world.

What ESG has added - in terms of an analytical approach and a constantly evolving body of knowledge - is a recognised vocabulary and a globally accepted set of measures. This set of knowledge allows to combine a more objective analysis of the performance related to everything related to sustainable capitalism with the measurement and estimation of financial and strategic indicators. Sustainability identifies issues of major importance according to our needs as human beings. We need a stable climate to survive and, in order to achieve this and prosper, we need a more balanced society and proper governance.

As asset managers, we therefore have a dual role: as companies, it is important we make these issues our own by including them in our business strategies. For example, Fidelity adheres to the recommendations of the Task Force on Carbon Related Disclosure and is committed to achieving zero emissions (scope 1, i.e. direct emissions within the organisation from the use of fossil fuels and the emission of any greenhouse gases into the atmosphere) by 2040. Or, in the social field, we aim to increase the share of women in senior management globally, already above 30%.

But even more important is the stewardship role that we as asset managers play towards the companies in which we invest. Fidelity International enjoys a privileged position. As one of the world's largest asset managers and with some of the most extensive proprietary research globally, we are able to engage directly with the companies we invest in or want to invest in. This is crucial, as our clients expect us, as stewards of their capital, to guide those companies towards the right business decisions and positively influence their behaviour, thereby seeking to build and protect investment returns.

The tools to achieve these goals are the integration of ESG themes into proprietary Research, even through building a proprietary rating system, and the engagement. Proprietary fundamental research is the feature on which Fidelity has built its history. At Fidelity we internalize ESG research on companies and integrate it into the fundamental economic research of each analyst through the different asset classes. The proprietary rating allows us to have a forward-looking vision and can, through engagement, push towards positive changes from which to benefit as investors. Our global size and relevance offer us a level of business access that very few enjoy and that we must make a use of in encouraging virtuous behaviours to benefit all the stakeholders.

Our success as shareholders and asset managers in communicating the importance of a sustainable business agenda is crucial to preserving long-term returns for customers and maintaining our reputation.


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