Fidelity International threatens a tough position on climate and sex

Fund management updates

Fidelity International, the global asset manager, says it will punish the directors of more than 1,000 companies worldwide next year if they fail to address climate change issues and the lack of gender diversity in the world. meeting room.

Large investors have traditionally been reluctant to vote against the re-election of directors at general meetings, but Fidelity said it will retain board members by 2022 when companies are considered to be making insufficient progress on board. diversity or in its response to global notice.

“Ultimately the boards should be held accountable,” said Jenn-Hui Tan, global leader in stewardship and sustainable investment at Fidelity International. “It’s their responsibility.”

Fidelity, which oversees $ 787 billion in customer equity, says it targets about 1,000 companies that are large emitters of greenhouse gases at the industry level or that contribute significantly to carbon emissions in their portfolios. of asset management.

It will vote against directors where companies do not have a policy on climate change or do not disclose emissions, with companies in the most exposed sectors expected to have targets to reduce carbon emissions among others. metrics. Based on the current situation in the target companies, Fidelity has warned that it could end up voting against the re-election of directors in 300-400 companies for climate change.

Fidelity also estimated that the directors of one-third of the 4,000 companies in which it invests are penalized for diversity on board. He says he will vote against directors in developed markets where boards are not at least 30 percent female, or 15 percent female in markets “where gender norms are still evolving.” The wealth manager already votes against the edges of all males.

Tan said Fidelity hoped that by speaking to the councils in the coming months, it would be able to encourage companies to act stronger in the face of diversity and climate change.

“We hope our policy will help companies… To recognize the value of having multiple boards and to ensure they have the right level of representation,” he said.

He added that the focus on diversity “does not start and end with the diversity of the board”. In Japan, for example, Fidelity is in the midst of a so-called engagement campaign, where it asked companies to provide data on women’s participation in the workforce and at the management and counseling level, and even of their gender pay gap.

Colin Baines, director of investment engagement at Friends Provident Foundation, which has put pressure on fund houses to use their vote on environmental, social and governance issues, said the commitment to vote against re-election of directors was significant.

“We need to see formal shareholder engagement policies and stronger management become the industry standard on the most pressing societal challenges and ESG risks as we avoid dangerous levels of climate change,” he added.

BlackRock and Legal and General Investment Management are among the other big estate managers directing directors to inadequate responses to the same problems. BlackRock said it voted against more than 1,850 directors in the year to the end of June 2021 for a lack of board diversity, and also against 255 directors for climate-related concerns.

Last year, Axa Investment Managers announced that it will adopt one of the funds industry’s toughest policies on gender diversity, requiring boards to be at least a third female in developed markets. He also said he would vote against the head of the nomination committee or against approving the accounts in emerging markets and in Japan if women do not have at least one seat or make up 10 percent of the boards. larger.

Catherine Howarth, chief executive of Share Action, said: “The vote against the directors of the company’s climate retardants is delayed and we applaud the asset managers for making their voting criteria crystal clear. before the 2022 AGM season ”.

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