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Fidelity International

PRI reporting framework 2017

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Process for engagements run internally

LEA 03. Process for identifying and prioritising engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

03.1. Indicate whether your organisation has a formal process for identifying and prioritising engagement activities carried out by internal staff.

03.2. Describe the criteria used to identify and prioritise engagement activities carried out by internal staff.

03.3. Additional information. [Optional]

Fidelity's analysts will prepare an agenda prior to any company meetings. This agenda will identify and prioritise the issues they intend to discuss with the company. Our portfolio managers will review this agenda ahead of the meeting making any adjustments as required. This agenda then forms the backbone of our discussions with the company.

Members of our ESG team also attend company meetings when specific ESG issues need to be addressed. The specialists work with the portfolio managers and analysts to determine the objectives of the engagement, how best to achieve them and then will ultimately discuss the results of the engagement with the investment team and any additional information relevant to our investment decision.

Fidelity is generally supportive of the management of the companies in which we invest but we will nonetheless form our own views on the strategy and governance of a business. This forms part of our dialogue with companies. On occasion our views will differ from those of management and where this is accompanied by a failure to achieve our reasonable expectations for investor return we will consider promoting change. Our specific response will be determined on a case by case basis and we will weigh up the relative merit of intervention or a sale of the shares. Typically we will choose to intervene to promote change when the expected benefits of intervention (through increased returns to our investors) outweigh the anticipated cost.

We generally will not divest in a company due to ESG concerns, in the first instance we will engage with the company to try and get a better understanding of the issue, to get a view as to what the management is doing about and promote change when relevant and required.


LEA 04. Objectives for engagement activities

New selection options have been added to this indicator. Please review your prefilled responses carefully.

04.1. Indicate if you define specific objectives for your engagement activities.

04.2. Indicate if you monitor the actions that companies take following your engagements.

04.3. Indicate whether your organisation defines milestones and goals for engagement activities carried out by internal staff.

04.4. Indicate if you do any of the following to monitor and evaluate the progress of your engagement activities carried out by internal staff.

04.5. Additional information. [Optional]

When our analysts or ESG team are engaging with a company, they will prepare an agenda with the items they wish to discuss with the company ahead of the meeting. This agenda is then shared with the portfolio managers/investment team and feedback is received.

After the company meeting, the analyst/investment team will then write up their notes from the meeting and again share these with the PM/investment team. Analysts will include these engagement notes in their reports that are published on our research management system which is visible to the whole investment team, including the portfolio managers, which then form part of the investment decision-making process.

Although we do not formally monitor the actions companies take following our engagements, we are always tracking the investment thesis of the company which forms part of our investment decisions.

Goals and objectives are identified ahead of the majority of our engagements, for example, when engaging in relation to voting activities we will flag concerns on proposals to our investee companies where we would be looking for them to make changes or improvements ahead of their next AGM and where no improvements have been made this would influence our voting behaviour at that company’s AGM the following year.

On occasion we will engage with a company to promote change ahead of a proxy vote.  If the company hasn't made the required changes we will often support the company but qualify it with them that if they don't change ahead of the next proxy vote, we will most like vote against the particular agenda item.  The ESG team will continue to engage with that company throughout the year and if the change still isn't forthcoming we will often vote against management.


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