Fidelity Management & Research Company

Climate Impact & Sustainability Data (2022-07 to 2023-06, 2023-07 to 2024-06)

Enhanced carbon framework incorporating forward-looking information from companies’ projected decarbonization pathways and a new proprietary Scope 3 model to estimate carbon emissions throughout a company’s entire value chain.
Increased coverage of fundamental forward-looking environmental, social, and governance (ESG) ratings, covering over 90% of the S&P 500® index and over 80% of the MSCI All Country World Index as of June 30, 2023.

Hosted Fidelity Sustainable Investing Energy Efficiency Conference and partnered with Columbia University’s Climate School to develop a curriculum focused on increasing climate literacy.
Improved engagement with companies on financially material risks and opportunities, holding over 800 stewardship engagements, including nearly 400 sustainability-focused engagements.

Updated stewardship principles, sustainability statement of policy, and proxy voting guidelines.
Launched a new internal engagement tracking tool to track engagements by company and topic and assess progress.
Enhanced proxy voting guidelines to include additional perspectives on board composition, hold members of the executive compensation committee accountable when voting against pay-related proposals, and ensure sufficient director time and attention to company matters.

Limitations in the quality and reliability of traditional climate modeling and third-party data, often based on self-reported, estimated data and non-comparable methodologies.
Growing volume of shareholder proposals requiring effective engagement and voting strategies.
Challenges in assessing projected abatement capacity and identifying economically feasible GHG reduction opportunities.

Leveraged advancements in science-based climate data estimation and modeling to enhance carbon emissions model, incorporating forward-looking information.
Developed a four-point decision-making framework for evaluating shareholder proposals on natural and human capital topics.
Introduced economic feasibility into conversations about greenhouse gas emissions abatement capacity to identify opportunities for reduction that bring strong economic benefit.

Engagement with suppliers on water stress and other material sustainability factors

Frameworks Used: SASB

Progress on reducing plastic waste in Amazon's packaging (95% replacement of plastic air pillows with paper filler in North America)
Procter & Gamble's 5% incremental improvement (13% overall reduction from 2017 levels) in reducing virgin plastics

Positive progress noted in 35% of financially material sustainability issues raised during engagements.
Meaningful progress on pay equity by companies like Goldman Sachs (global adjusted pay gap analysis) and Microsoft (inclusion of unadjusted median pay metrics)
Enhanced disclosures by CIE Automotive on Scope 3 emissions reduction plans

Updated Stewardship Principles and Proxy Voting Guidelines to reflect evolving approach to sustainable investing and stewardship.
Increased support for shareholder proposals (21% in 2024 compared to 17% in 2023)

Less than 10% of S&P 500 companies reported achieving 100% pay equity in 2023.
Incomplete disclosures and lagging progress on child labor and living wages in Mondelez's cocoa supply chain.
Lack of detailed quantitative targets and execution plans for Scope 3 emissions reduction by CIE Automotive (prior to engagement).

Engagement with companies to encourage pay equity assessments, disclosure of pay gaps, and progress towards adjusted and unadjusted pay equity.
Engagement with Mondelez to improve disclosure and monitoring of child labor and living wages in cocoa supply chain.
Engagement with CIE Automotive to establish quantitative targets, detailed execution plans, and regular reporting on Scope 3 emissions reduction.

Frameworks Used: SASB