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Fidelity Investments

PRI reporting framework 2020

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ESG incorporation in actively managed listed equities

Implementation processes

LEI 01. Percentage of each incorporation strategy

01.1. Indicate which ESG incorporation strategy and/or combination of strategies you apply to your actively managed listed equities; and the breakdown of your actively managed listed equities by strategy or combination of strategies.

ESG incorporation strategy (select all that apply)

Percentage of active listed equity to which the strategy is applied — you may estimate +/- 5%
100 %
Total actively managed listed equities 200%

01.2. Describe your organisation’s approach to ESG incorporation and the reasons for choosing the particular strategy/strategies.

As long-term investors, Fidelity manages funds and accounts with the overriding goal of providing the greatest possible return to shareholders and clients consistent with the investment Guidelines and objectives of each fund and account. As part of our process of deciding whether to buy, or sell, a company's securities, we take into consideration corporate governance practices, including ESG issues where we believe those issues are material to the company's outlook and/or valuation. Fidelity believes that strong management creates long-term shareholder value, and we generally support management of companies in which we have invested fund and account assets. While we generally do not screen out companies from our investment universe, with the exception of select products, Fidelity believes that evaluating companies from a variety of perspectives helps us develop a more robust information mosaic on which we can build our investment theses. Therefore, ESG considerations are generally incorporated into our evaluation of an issuer's investment risk or return, across all asset classes, sectors, and markets in which we invest. To this end, we are committed to providing our investment teams with resources to inform their investment decisions about individual securities, including research and data on ESG topics.

01.3. If assets are managed using a combination of ESG incorporation strategies, briefly describe how these combinations are used. [Optional]


LEI 02. Type of ESG information used in investment decision (Private)


LEI 03. Information from engagement and/or voting used in investment decision-making (Private)


(A) Implementation: Screening

LEI 04. Types of screening applied

04.1. Indicate and describe the type of screening you apply to your internally managed active listed equities.

Type of screening

Screened by

Description

Fidelity's social and environmental thematic fund, Fidelity Select Environment and Alternative Energy Portfolio, invests primarily in domestic and foreign common stocks engaged in business activities related to nutrition and health, alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies, or other environmental support services. 

In 2018, Fidelity created and manages an ESG Investing Pilot which provides new and existing retail clients with the opportunity to customize the management of an existing retail product with select use of ten exclusionary ESG themes. This offering enables clients to pursue long-term growth potential, while aligning the portfolio with their values and preferences.

We manage certain custom portfolios for institutional investors that incorporate ESG criteria. These custom portfolios may include restrictions or exclusions for specific companies, market sectors, violators of global norms, or industry laggards as requested by our client.

Screened by

Description

The actively managed Fidelity Women's Leadership Fund uniquely evaluates companies that are incorporating progressive gender diversity policies. Spanning all sectors, this fund provides investors with an opportunity to support women and incentivize companies to implement their own gender diversity initiatives and advance more women into leadership positions.

We also manage certain custom portfolios for institutional investors that incorporate ESG criteria. These custom portfolios may include restrictions or exclusions for specific companies, market sectors, violators of global norms, or industry laggards as requested by our client.

Screened by

Description

We manage certain custom portfolios for institutional investors that incorporate ESG criteria. These custom portfolios may include restrictions or exclusions for specific companies, market sectors, violators of global norms, or industry laggards as requested by our client.

04.2. Describe how you notify clients and/or beneficiaries when changes are made to your screening criteria.

Changes to agreed-upon screening criteria would require an amendment or change to the objective or investment guidelines of the institutional client's custom portfolio. In these cases, Fidelity would seek agreement with the relevant clients prior to implementing any change.


LEI 05. Processes to ensure screening is based on robust analysis

05.1. Indicate which processes your organisation uses to ensure ESG screening is based on robust analysis.

05.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your ESG screening strategy.

05.3. Indicate how frequently third party ESG ratings are updated for screening purposes.

05.4. Indicate how frequently you review internal research that builds your ESG screens.

05.5. Additional information. [Optional]


LEI 06. Processes to ensure fund criteria are not breached (Private)


(B) Implementation: Thematic

LEI 07. Types of sustainability thematic funds/mandates

07.1. Indicate the type of sustainability thematic funds or mandates your organisation manages.

07.2. Describe your organisation’s processes relating to sustainability themed funds. [Optional]

Fidelity's social and environmental thematic fund, Fidelity Select Environment and Alternative Energy Portfolio, invests primarily in domestic and foreign common stocks engaged in business activities related to nutrition and health, alternative and renewable energy, energy efficiency, pollution control, water infrastructure, waste and recycling technologies, or other environmental support services.

Fidelity's Women's Leadership actively managed mutual fund follows a global equity strategy of investing in both growth and value stocks, targeting companies that fulfill at least one of three criteria:

1. A woman on the senior management team;

2. At least one-third female board members; or

3. Demonstrated commitment through gender diversity initiatives and policies to attract, retain, and promote women.

As an actively managed fund, Fidelity Women’s Leadership Fund is uniquely capable of delving deeper, beyond focusing purely on gender demographics, to evaluate companies that are incorporating these progressive gender diversity policies. Spanning all sectors, this fund provides investors with an opportunity to support women and incentivize companies to implement their own gender diversity initiatives and advance more women into leadership positions.

We manage certain custom portfolios for institutional investors that incorporate ESG criteria. These custom portfolios may include restrictions or exclusions for specific companies, market sectors, violators of global norms, or industry laggards as requested by our client.


(C) Implementation: Integration of ESG factors

LEI 08. Review ESG issues while researching companies/sectors

08.1. Indicate the proportion of actively managed listed equity portfolios where E, S and G factors are systematically researched as part of your investment analysis.

ESG issues

Proportion impacted by analysis
Environmental

Environmental

Social

Social

Corporate Governance

Corporate Governance

08.2. Additional information. [Optional]

Fidelity believes that high standards of corporate responsibility generally make good business sense and have the potential to protect and enhance investment returns. Consequently, our investment process takes ESG issues into account when, in our view, they have a material impact on either investment risk or return consistent with the investment Guidelines and objectives of each fund and account.


LEI 09. Processes to ensure integration is based on robust analysis

09.1. Indicate which processes your organisation uses to ensure ESG integration is based on robust analysis.

09.2. Indicate the proportion of your actively managed listed equity portfolio that is subject to comprehensive ESG research as part your integration strategy.

09.3. Indicate how frequently third party ESG ratings that inform your ESG integration strategy are updated.

09.5. Describe how ESG information is held and used by your portfolio managers.

09.6. Additional information. [Optional]

Our portfolio managers and analysts incorporate ESG factors and research into the “mosaic”  they use to evaluate investment opportunities. We currently use two of the industry's leading ESG research providers, both of which are integrated into our proprietary investment technology. Analysts and portfolio managers also have access to a wide array of ESG resources via ESG data providers, as well as sell-side ESG research from leading brokerage houses.

These research sources provide extensive coverage of ESG issues:  company specific ratings and research, corporate engagement activity, and thematic sector and industry ESG research. Dedicated ESG analysts from each of the research providers are available to our investment team for consultation on company-specific issues or industry research.

ESG information is provided in equity (retail & institutional) and fixed income investment & research interfaces, where ESG ratings are present on holdings and benchmarks.


LEI 10. Aspects of analysis ESG information is integrated into (Private)


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