The Sustainable Family Funds adhere to Fidelity’s Firm Wide Exclusion List and as well as an additional Sustainable Family Exclusion List.
Firm wide we adopt a principles-based approach to ESG matters and as part of this we place companies which we regard as unsuitable investments on an Exclusion List. When deciding on whether or not to exclude a company we are guided by international conventions particularly the Convention on Cluster Munitions, the International Convention on the Prohibition of the use of, stockpiling, production and transfer of Anti-Personnel Mines, guidance from The United Nations, The World Bank and other global regulations which uphold ESG principles.
In addition, for Funds, included in the Sustainable Family, we exclude:
a) Controversial weapon manufacturers (nuclear, biological, chemical, non-detectable fragment and blinding lasers).
b)Tobacco production companies
c)Companies which violate the 10 principles of UN Global Compact
d)Manufacturers of Semi-Automatic Weapons
An internal advisory group with authority to determine and govern the application of these exclusions will meet every six months to review the exclusions list.
Best In Class Approach
The Sustainable Family funds follow a best-in-class approach. The investment universe is driven by selecting companies with strong and improving ESG characteristics, whilst aiming to achieve compelling long-term financial performance and outperformance of its benchmarks. The investment process actively seeks to select companies that are high ESG performers relative to peers and with a target to outperform its benchmarks. The Sustainable Family funds must invest at least 70% of portfolio in securities with strong ESG characteristics and up to 30% of portfolio with low(er) but improving ESG characteristics.
We use a waterfall approach to monitor the sustainable characteristics and compliancy with the framework for the Sustainable Family fund range. MSCI is the primary source for corporates and backfilled by Fidelity Sustainability Ratings, if they don’t have a rating for a security. A security is deemed to have good sustainable characteristics if its rating is AAA - BBB from MSCI or A - C from Fidelity. MSCI ESG Sovereign Ratings is used for Sovereign securities and good sustainable characteristic requires a rating between AAA – BB”.
Currently 2 of our Fixed Income Products are part of the Sustainable Family: (i) Sustainable Reduced Carbon Bond Fund (ii) Sustainable Strategic Bond Fund