Fidelity CEO says capitalism needs to “look at itself” in new climate disclosure report

Climate change protest

Fidelity International, the fifth largest asset manager in the world, has outlined plans to “close the gaps” in its climate change initiatives, in its first ever Task Force on Climate-related Financial Disclosures (TCFD) annual report.

Earlier in the year, the asset manager committed to reduce its operational carbon emissions to net zero by 2040.

“I think it is time for capitalism to look at itself and go through one of its periodic reinventions. And I think we as a global asset manager should be at the centre of that reinvention,” says Anne Richards CEO, Fidelity International.

In the new TCFD report, the asset manager says it is looking to cut emissions by amending its air travel policies, increasing its use of renewable energy, and developing policies for climate change voting and engagement.

“Just as we encourage and support our investee companies to report according to the TCFD recommendations, so too are we publishing this inaugural Fidelity International TCFD report,” explains Jenn-Hui Tan, global head of stewardship and sustainable investing.

In November, UK Chancellor Rishi Sunak, announced that the UK will make TCFD-aligned disclosures fully mandatory by 2025. The Financial Conduct Authority plans to consult in the first half of 2021 on introducing TCFD obligations earlier for asset managers, life insurers and pension providers, with a view to bringing in those rules for the largest firms by 2022.

The TCFD is a market initiative to promote consistent climate-related financial risk reporting, which is supported by more than 1,000 private companies globally including Fidelity International, which amounts to a total of almost USD12 trillion in assets.

Tan continues: “We have found the process of TCFD reporting to be extremely valuable in raising our awareness of areas for improvement – as aspired to, and envisioned by, the TCFD. We intend to close the gaps revealed through this year’s reporting process as we move forward.”

Between 2019 and 2020, Fidelity’s UK operation was responsible for over 4,000 metric tonnes of carbon dioxide equivalent emissions, which has fallen by more than a third since the previous year. It did not disclose emissions from other jurisdictions, saying it was a “near-term priority” to incorporate other offices.

In terms of energy use, the report notes the installation of solar panels in Fidelity’s Bermuda and Surrey offices, and a recent wind energy contract to match the electricity demand for its UK operations over the next five years.

The firm also says it is “currently making changes” to its business travel policy to ensure a reduction in its carbon footprint, by reassessing the 60-70 per cent of company air travel previously taken for internal meetings. Fidelity notes that this policy has been influenced by the 2020 Covid-19 pandemic, which has “radically reduced” its air travel.

The asset manager is also expected to launch policies for climate change voting and climate change engagement in 2021. 

Fidelity admits that it has not undertaken a “full corporate-focused climate-related scenario planning analysis”, but believes that it will provision for this work in the coming year.

Tan concludes: “We believe that by working within the TCFD framework, Fidelity International and companies around the globe can make a significant contribution to a much more detailed and comprehensive understanding of climate-related financial risks and opportunities. A higher quality of reporting will in turn create an enhanced appreciation of and consideration for the role that climate change may play in companies’ current and, even more crucially, future prospects.”