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Daily ESG Briefing: Fidelity International pledges to halve portfolio emissions by 2030

The latest developments in sustainable finance

Fidelity International has committed to halve the emissions from its investment portfolio by 2030 as it sets out its new climate investing policy. The $787bn asset manager said it would step up its engagement with high emitters to accelerate their transitions, initially focusing on thermal coal producers. Where companies show no progress towards transition at the end of three years, Fidelity will look to divest. It hopes to exit thermal coal in the OECD by 2030, and the rest of the world by 2040, with all issuers generating more than 5% of their revenues from thermal coal production or generation excluded from Fidelity’s sustainable funds unless they have a higher renewables share and a robust transition plan in place.

More than two thirds of companies in the ASX200 have set a clearly defined sustainability strategy, with 44% detailing how it is integrated into their wider corporate strategy, according to a new report from PwC. The analysis found “notable pockets of excellence” among company reporting but said that progress still needed to be made in a number of critical areas, with only a quarter of companies setting sustainability targets and KPIs. While ESG disclosures are becoming more popular, with an 8.5% increase in companies getting ESG reporting externally assured, only 36% of companies have set a Net Zero target, and three quarters have failed to implement a reconciliation plan for indigenous peoples endorsed by Reconciliation Australia. 

Also in Australia, the Government has announced it will target Net Zero by 2050, and published a long-term emissions reduction plan. The target, which does not include any new emissions cuts, will not be enshrined in legislation and was criticised by industry groups and civil society. The Investor Group on Climate Change said the step was a positive long-term signal for investors, but criticised the lack of a Paris-aligned 2030 target, and warned that the current target “remains an acute risk to the Australian economy”, and could act as a barrier to investment. Renewables industry group the Smart Energy Council said that the strategy “is not a plan, it’s a scam”, while the Climate Council said that “net zero by 2050 is a joke without strong emissions cuts this decade”. 

Fossil fuel divestment commitments have been made by almost 1,500 institutions representing $39.2trn in assets, according to a new report from a group of NGOs. Divestment commitments have grown by 49% in the last three years, with institutions across 71 countries committing to phase out their fossil fuel investments. To coincide with the report’s launch, the cities of Rio de Janeiro, Glasgow, Paris, Seattle and Copenhagen all committed to divest fossil fuels, along with the Catholic Bishop’s Conference of Scotland.

The EU “punches significantly above its weight” with ESG activity in global capital markets, with the share of sustainable investment funds 12 times that of the US, according to New Financial’s latest ESG benchmarking report. Some 65% of large European financial firms have signed up to at least one ESG initiative, with Europe leading other regions in 90% of the metrics analysed in the report. The UK is lagging behind its continental neighbours, with ESG bond issuance at just 4% of total issuance versus 11% in the EU, and ESG fund assets at 6% of total assets, half that of the EU.

UK pension schemes are struggling to make decisions on climate risk due to poor availability of data, according to new research from CACEIS, the asset servicing banking group of Crédit Agricole and Santander. The survey of 130 UK schemes found that 72% required better reporting of ESG and carbon data, with 57% complaining about the lack of consistent data and poor comparability. Only 11% of schemes independently verified their exposure to ESG and climate risks, with most relying on their asset manager or consultants to address them. A vast majority – 93% – said that climate change would have some impact on scheme investments, but only 23% said that this impact would be high.