Will more fund managers start voting for stocks based on climate issues? Fidelity International enters the game | Foley Hoag LLP – Environmental Law
After The No. 1 engine’s successful effort to elect more climate-friendly directors at Exxon and more and more aggressive action by BlackRock To factor the climate into its investment management decisions, the world is watching for new evidence of capitalism’s efforts to save the world from, well, capitalism.
The latest news comes from Fidelity International (not to be confused with Fidelity Management and Research), which this week released its “Sustainable Investing Voting Principles and Guidelines.”
The Guidelines are a mixed bag and I think the reaction to them will depend on whether it’s kind of glass half full or glass half empty. Here is the meat of the climatic provisions:
We believe a minimum standard is for companies to provide:
– A strong policy on climate change.
– Emission data.
– Confirmation of discussion and oversight of climate change at board level.
Additionally, for companies in the most impacted industries, we strongly encourage the following:
– Targets for reducing greenhouse gas emissions.
– Description of the impacts of climate-related risks and opportunities on their activities, strategy and financial planning.
– Scenario planning including several scenarios.
– Impact scenario referring to 1.5°C limits.
For climate hawks, also known as glass half-empty types, these minimum standards are quite minimal indeed; they don’t actually demand much from the companies in which Fidelity International invests. For glass-half-full types, the Guidelines are part of a significant trend that capitalism is beginning to check itself.
Personally, I have always thought that a glass half full is also half empty. These guidelines appear to be part of a growing trend in shareholder climate activism, but it’s a trend that’s going to have to start accelerating fairly quickly if it’s to result in meaningful action. And it is a trend that must go hand in hand with legislation and regulation. It is a complement to government action, not a substitute for government action.