Fidelity International, winner of Asia Asset Management’s (AAM) 2025 Best of the Best Award for Best ESG Manager (Hong Kong), is beefing up the comprehensiveness of its sustainability capabilities in a bid to meet clients’ increasingly sophisticated sustainable investing demands.
According to Gabriel Wilson-Otto, global head of sustainable investing strategy at Fidelity International, the last few years have seen a shift towards greater clarity in sustainable fund objectives and disclosures, due to new regulations for product classification and evolving client demands.
This is contributing to a shift away from the view that their one approach to ‘ESG investing’ is moving towards a more nuanced position that recognises a wider spectrum of sustainable investing approaches.
Asset owners have also enhanced their formal frameworks for ESG integration and assessment of external managers with the aim of appropriately reflecting long-term risks within portfolio construction. They are increasingly distinguishing between the adoption of ESG goals for value alignment and return maximisation, Wilson-Otto says in an interview with AAM.
Meeting expectations
On the company’s sustainable investing capabilities, Wilson-Otto says Fidelity International aims to “meet client expectations and preferences across a spectrum from light green to dark green”.
“We aim to meet client expectations, as well as regulatory disclosure requirements,” Wilson-Otto notes.
Fidelity International also places great emphasis on achieving the principles of consistency, transparency, and integrity, ensuring that its ESG modules can meet different clients’ requirements, which Wilson-Otto believes allows the company to scale, monitor and report on ESG investing effectively.
In addition, Fidelity International looks at the overlap in both client and regulatory expectations in different tiers of sustainability products, such as the frameworks for light green and dark green funds in different markets, and the minimum standards for the funds with ESG commitments.
By leveraging its integration tools and stewardship approaches, the company has also developed a sustainable investing framework that comprises three product categories, namely ESG unconstrained, ESG tilt and ESG target. The framework is applicable for different geographies and asset classes and allows the company to demonstrate its ESG integration outcomes more clearly to align with clients’ expectations.
Customised solutions
Fidelity International also prides itself on its ability to offer bespoke ESG solutions to institutional investors. For instance, an Australian superannuation fund became a cornerstone investor last year when it invested in the company’s real estate impact strategy. To meet the superannuation’s decarbonisation demand, the fund focuses on acquiring logistics assets and refurbishing them to improve their climate footprints.
Wilson-Otto says the company has been pressing ahead with the enhancement of its ESG capabilities. The company has revamped its climate rating system, so that it can use third-party data and proprietary analysis to evaluate the net-zero transition for its invested companies.
It has also strengthened the integrity of its sustainable development goal (SDG) alignment assessment, which is applied to different categories in different areas.
In addition, Fidelity International has enhanced monitoring of stewardship activities with a new framework to assess the progress of an engagement against structured milestones. This allows its clients to better understand the targets, progress, and outcomes of their engagements, Wilson-Otto says.
As for regulatory trends, there has been an increasing movement towards global harmonisation. The trend is underscored by the fact that the International Sustainability Standards Board (ISSB) has been broadly adopted across different markets. Wilson-Otto points out the ISSB plays an important part in providing a global baseline for climate disclosure.
Meanwhile, there are more classifications and regulations related to prudential risk management and corporate disclosure such as the Corporate Sustainability Reporting Directive in Europe.
“We’re seeing increasing pragmatism in the approach,” Wilson-Otto says, adding that he believes that this global harmonisation, and the adoption of the global standards and disclosure frameworks will continue to gather momentum going forward.
