Investment management firm Fidelity International announced today a new focused sustainable investment approach, targeting four systemic themes, including nature loss, climate change, strong and effective governance, and social disparities, which will drive the firm’s engagement approach towards influencing positive change.

According to Fidelity’s Chief Sustainability Officer Jenn-Hui Tan, the four focus themes were selected “as these present the most significant systemic risks for our economic and social systems.

Tan added:

“Failing to address these issues or looking at each issue in isolation will prevent us from collectively transitioning to a sustainable economy and will negatively impact portfolios.”

Fidelity’s focus on nature loss follows the recent launch in late 2023 by the firm of its Nature Roadmap, outlining the company’s approach to the integration of nature in its sustainable investments and stewardship processes. The firm is also a foundation member and signatory of the Finance for Biodiversity pledge, a collaboration of more than 150 financial institutions representing more than $22 trillion in assets under management, committed to protect and restore biodiversity through their financing activities and investments, sharing knowledge; engage with companies, assess impact, set targets and reporting publicly on these activities before 2025. Under its new sustainable investment approach in 2024, Fidelity said that it will address nature loss issues through its engagement activities, and vote against companies in high-risk sectors that fail to meet expectations on deforestation-related practices and disclosure.

On the climate front, Fidelity said that it will continue to reinforce its approach based on its goals, which include achieving net zero across its investment portfolios by 2050 and halving portfolio carbon footprint by 2030. The firm said that it aims to champion further developments in transition finance, including innovation in sustainable debt instruments, and that it will seek regulatory engagement opportunities encouraging governments to close policy gaps to make green technologies cheaper, and with regulators working to effectively channel transition financing.

Fidelity’s social disparities efforts will focus on the Just Transition, with the firm noting that an unintended consequence of initiatives to decarbonize could be increased inequalities, which could “impede climate action and potentially negatively impact individual companies’ prospects, and investors’ portfolios overall.” The firm said that it will utilize active stewardship in 2024, particularly in its thermal coal engagement programme, to support social transitions in communitie that require it most. Fidelity has committed to phase out investment in thermal coal by 2030 in OECD countries and in the rest of the world by 2040.

In its efforts to target “strong and effective governance,” Fidelity said that it will intensify its dialogue, and utilize voting and shareholder resolutions in situations in which companies’ governance-related actions and efforts are deemed inadequate, with a focus on issues including board effectiveness, corporate culture and behaviour, remuneration and shareholders’ rights and transparency. 

Tan said:

“In 2024, Fidelity will strive to amplify its active ownership approach as a positive force for driving sustainable business practices in the companies we invest in. In parallel we will continue to contribute actively to the development of key regulations such as SFDR and the implementation of regulation coming into force this year such as CSRD, which we think will be essential for encouraging and harmonising sustainable investing across the industry.”

International asset manager Robeco announced the introduction of ocean sustainability and phasing out hazardous chemicals as two new focus themes that it will be discussing with companies in its 2024 engagements, in addition to stepping up pressure on high carbon companies to align with climate goals, and engaging with fashion companies to address key sustainability issues in the sector.

According to Robeco, each of its engagement topics were selected following consultation with clients. The asset manager’s sustainable investment engagements typically run for three-year periods, with engagement specialists in contact with selected investee companies to track progress against objectives.

Peter van der Werf, Head of Engagement at Robeco, said:

“We listened to our clients, and that’s why we’ve changed our approach.”

Robeco’s new ocean biodiversity theme will target approximately six companies assessed as having a significant impact on sea life, such as aquaculture and fisheries, focusing on issues including maritime pollution and overfishing. The company will also engage on the impact of deep sea mining, largely through its involvement in biodiversity-focused investor engagement group Nature Action 100.

The hazardous chemicals theme will also target around six companies, with a particular focus on phasing out PFAS. Widely known as “forever chemicals,” PFAS are a group of chemicals that have been in use in a wide range of consumer and industrial products since the 1940s, and are commonly found in food packaging, fabrics, kitchenware products, fire-fighting foam, and electronics, among other products. The chemicals tend to be very persistent, and don’t break down over time, and have been found to accumulate in the human body and in the environment.

Sylvia van Waveren, Robeco’s Senior Engagement Specialist responsible for dialogue with the chemicals industry, said:

“Both ocean biodiversity and hazardous chemicals have a focus on the planetary boundaries, which are way out of the safe zone.”

Under its ongoing “acceleration to Paris” theme, initially launched in late 2021, Robeco said that it will place a greater emphasis on speeding up the transition of business models to meet the Paris Agreement temperature goals, targeting high-carbon companies lagging behind in the net-zero transition. Robeco said that it will set minimum standards for 42 companies, with 2026 and 2028 deadlines for developed world and emerging markets companies, respectively, with potential exclusions to be put in place if the standards are not met.

Cristina Cedillo, Senior Engagement Specialist responsible for coordinating climate engagement at Robeco said that the minimum standards for the climate theme include “reporting emissions data for Scope 1 and Scope 2 and subsequently setting targets for emissions reductions.”

Cedillo added:

“In addition, we expect oil and gas companies to set methane targets, which is something that we don’t have yet. Finally, we also need companies to commit to no new coal expansion. All these criteria are part of our enhanced engagement program, which means that a company could be excluded if we were to conclude our engagement as non-effective.”

The sustainable fashion theme follows the recent launch by Robeco of the Fashion Engagement Equities Strategy, aimed at enabling investors to meet the dual objectives of earning attractive investment returns while promoting sustainability-focused change in the fashion industry. The fund aims to invest in 30 to 40 publicly listed companies across the entire fashion value chain, with a view to engaging with each portfolio company on improving sustainability, across key areas including decent work, natural resource stewardship, circular models, stakeholder management, and governance & policies.

van der Werf added:

“We used to do a deep dive on a peer group of companies, put them into an engagement theme, and then end the themes at the same time. Now we’re really planning to add companies on a rolling basis when our investment and sustainability research indicates the need for engagement.

“So, we’ll continue with what we call our ‘evergreen’ engagement themes of climate, biodiversity, human rights and governances. “It’s all an ongoing process, but with a focus on engaging where the most urgent issues will arise for companies in our strategies next year.”

Private equity investor Apax announced the final close of the Apax Global Impact Fund (AGI), with commitments of approximately $900 million for investments in companies that provide products and services addressing environmental and social issues.

According to Apax, the fund aims to support companies delivering tangible social or environmental impact, targeting key themes including Health & Wellness, Environment & Resources, Social & Economic Mobility, and Digital Impact Enablers, utilizing a proprietary impact measurement system to evaluate and monitor impact and identify and track outcomes across the portfolio.

The fund is classified as Article 9 under the EU’s SFDR regulation.

Jason Wright, Chair of Apax’s Global Impact strategy, said:

“We’re incredibly excited by the possibilities within the burgeoning impact space, and this successful fundraise is testament to our distinctive and differentiated proposition. The Apax Global Impact team have an impressive combination of private equity experience and impact expertise, making them ideally positioned to help visionary businesses accelerate growth and unlock value.”

To date, AGI has invested in four businesses, including supply chain risk management software platform GAN Integrity, social good-focused software company Bonterra, eating disorder treatment provider Eating Recovery Center, and Swing Education, an online marketplace connecting schools and substitute teachers.

Apax co-founder and Chair of the firm’s Global Impact Advisory Board Sir Ronald Cohen said:

“The world has historically operated on two parameters: risk and return. We now find ourselves shifting to three dimensions: risk, return and measurable impact. It is incredibly important that as businesses generate profits, they also deliver improvement in the lives of people and the state of the planet. The Apax Global Impact fund is committed to this mission.”   

Apax’ 14-person impact team is led by Managing Partners Alykhan Nathoo and David Su, and supported by its 5-person Impact Advisory Board, which provides guidance on matters including impact measurement and on driving additional impact across partner companies.

Lawmakers in the European Parliament and Council announced today that they have reached a provisional agreement on the EU’s proposed corporate sustainability due diligence directive (CSDDD), outlining rules for companies requiring large businesses to assess and address adverse human rights and environmental impacts in their value chains.

The agreement follows the release of a proposed CSDDD directive by the European Commission in February 2022, and sets out obligations for companies to identify, assess, prevent, mitigate, address and remedy impacts on people and planet – ranging from child labor and slavery to pollution and emissions, deforestation and damage to ecosystems – in their upstream supply chain and some downstream activities such as distribution and recycling.

Following the announcement EU Commissioner for Justice Didier Reynders said:

“Today’s agreement is a big achievement for the EU. It represents a leap forward to achieve a more sustainable and fairer economy, both from a social and environmental dimension. The new rules will ensure that responsibility and transparency are respected in value chains.”

The new rules will apply to EU companies with more than 500 employees and over €150 million in global revenues, as well as to companies with over 250 employees and €40 million revenues, with at least €20 million in revenues in key sectors related to manufacture of textiles, clothing and footwear, agriculture, mineral resources and construction.

The requirements will also apply to non-EU companies with more than €300 million net revenue generated in the EU, beginning 3 years after the directive’s entry into force.

The new directive will require affected companies to integrate due diligence on impacts into their policies and risk management systems, including descriptions of their approach, processes and code of conduct.

The agreement also requires companies to adopt climate transition plans plan ensuring that their business models and strategy are aligned with the Paris Agreement goal to limit global warming to 1.5°C.

One of the key changes to the Commission’s proposal sought by the EU Parliament’s negotiating position was the inclusion of financial service providers under the new directive, while Council’s position left the decision to include these companies up to member states. Under the negotiated agreement, the financial sector will be temporarily excluded from most of the CSDDD requirements, while a review clause will be included for a possible future inclusion of the sector.

The new rules also include requirements for companies to engage with those affected by their business activities, with obligations including the introduction of a complaints mechanism, with a 5 year period for claims by those concerned by adverse impacts, as well as communication of due diligence policies and monitoring of the policies’ effectiveness.

Additionally, the new agreed directive also sets up a system of supervision and sanctions, with member states setting up supervisory authorities to monitor compliance with the obligations, and to impose penalties including “naming and shaming,” and fines of as much as 5% of annual global revenue.

Sustainability-focused groups welcomed the agreement, but expressed concerns about the exclusion of the financial sector from the directive’s obligations. In a statement issued following the announced agreement, Isabella Ritter, EU Policy Officer at responsible investment research and campaigning NGO ShareAction, said:

“In the EU negotiation dance, we’ve scored an important win for people and planet – financial institutions, including banks, insurers, and investors, remain within the scope of the CSDDD and will now have to adopt a Paris-aligned transition plan. Yet EU negotiators have missed a resounding opportunity for more transformative change. Despite strong support from financial sector representatives and civil society, EU policymakers, due to the Council’s pressure, chose to exempt financial institutions from due diligence requirements when offering financial services to their clients. This grants financial institutions a free pass to neglect human rights and environmental harms.”

With the agreement in place, the CSDDD will now require formal approval by the EU Council and Parliament before entering into force.

Global technology company IBM announced the launch of free sustainability courses, targeting learners across communities underrepresented in technology, aimed at providing skills for the green economy.

The new courses will be provided by IBM SkillsBuild, a free education program focused on underrepresented communities in tech, that helps adult learners, and high school and university students and faculty, develop valuable new skills and access career opportunities, through collaborations with social service, economic development, and vocational organizations, as well as government agencies, and universities.

According to IBM, the announcement comes alongside new research from the company and business intelligence company Morning Consult, with a survey of more than 3,000 global business leaders indicating a growing skills gap in sustainability, including 71% who reported that they expect to implement more sustainability experience hiring criteria within the next two years, and 92% who said their organizations will likely invest in employee training on using IT to advance sustainability goals within the next year.

The new IBM SkillsBuild Sustainability Roadmap will include AI-powered recommendations for each learner, with interdisciplinary coursework connect topics such as ecology and biodiversity, with technology training in AI and data analytics. Coursework will include introductory courses, mid-level offerings in design thinking and green entrepreneurship, and advanced courses for learners to apply their skills to sustainability topics across AI, cybersecurity, and ESG reporting.

The launch of the new courses follows a commitment announced by IBM in 2021 to provide 30 million people with new skills for future job needs, with a focus on underrepresented communities.

Justina Nixon-Saintil, IBM Vice President & Chief Impact Office, said:

“With nearly half of the global population vulnerable to significant environmental distress, new strategies to help create a sustainable future are essential. This means scaling solutions to help people immediately, while also cultivating a pipeline of future leaders at the intersection of technology and sustainability across industries.”

The California Public Employees’ Retirement System (CalPERS), one of the largest public pension funds in the U.S., announced the launch of its new Sustainable Investments 2030 Strategy, aimed at accelerating its transition to a net zero emissions portfolio, and including a new pledge to invest $100 billion in climate solutions by 2030.

The new strategy also outlines actions that would see CalPERS engage with portfolio companies on their net zero plans, and exit investments in companies that do not have a credible plan to reduce carbon emissions.

CalPERS Interim Chief Investment Officer Dan Bienvenue said:

“CalPERS is providing a tangible and measurable roadmap as we look to support companies, projects, and technologies that are playing a crucial role in promoting sustainable investing, reducing greenhouse gas emissions, and supporting the transition to a low-carbon economy. Our plan is expansive and addresses the need for climate solutions across every industry and not just fossil fuels.”

In a presentation to the investment committee of the Board of Administration, CalPERS outlined the primary objectives of the new sustainable investment plan, which included the generation of outperformance by investing in climate solutions and emerging and diverse managers, increasing portfolio resilience by fully integrating ESG analysis, including climate risk analysis, implementing a path to net zero through investments, engagement and advocacy, promoting greater inclusion and representation in the financial industry and broader economy, and promoting efficient and equitable financial markets through advocacy and regulatory action.

According to CalPERS, the new $100 billion climate solutions commitment would align its investments with its goal to reduce portfolio emissions intensity by 50% 2030, and support its ambition to balance carbon emissions from its investments with carbon reductions by 2050.

The climate solutions targeted by the fund fall under 3 broad categories, including Mitigation, or investments in areas that aim to enable GHG emissions reductions at scale, Adaptation, with investments that aim to reduce harm or to exploit opportunities from climate change effects, and Transition, with investments focused on hard-to-abate sectors – such as heavy industry or transport – with credible decarbonization plans.

Peter Cashion, CalPERS’ Managing Investment Director for Sustainable Investing, said:

“These investments, which we believe can be made across an array of asset classes, will be designed to generate excess returns and boost our earnings in service to the mission of meeting our members’ retirement dreams.”

Alongside the new 2030 investment goal, specific actions outlined in the strategy to support CalPERS pathway to net zero included engaging portfolio companies on their net zero plans, advocating for policy and regulation promoting decarbonization and expanding investment opportunities, developing a process to exit certain investments in companies without credible transition plans, integrating climate risks and opportunity assessment into investment decisions, and enhancing the measurement and reporting of portfolio emissions.

In addition to the climate-related commitments, the new strategy also included goals to promote greater inclusion and representation in the financial industry and global economy, with actions including surveying external managers to keep track of their diversity achievements increasing efforts on regulatory requirements and shareowner action, and a focus on human capital management, with plans to advocate for mandatory corporate reporting on human capital management, integrate human capital management data to support investment decision making, and promote labor principles that ensure the fair treatment of workers.

CalPERS CEO Marcie Frost said:

“Our 2030 strategy for sustainable investing is the next step in CalPERS’ efforts to improve our long-term investment returns while also making meaningful progress in the fight against climate change. In addition, we are continuing the important work of promoting inclusive corporate leadership and the rights of workers.”

Alternative asset and private equity investor KKR announced today that it has raised $2.8 billion at the final close of its second fund focused on investing in companies that contribute measurable progress toward the United Nations Sustainable Development Goals, KKR Global Impact Fund II.

Launched in mid-2021, the new fund more than doubled the size of its predecessor Global Impact Fund, which raised $1.3 billion at its final close in 2020.

Ken Mehlman, KKR Partner and Co-Head of KKR Global Impact, said:

“Globally, there is increased urgency to solve some of the world’s greatest challenges, such as the energy transition, supply chain resiliency, digitization and a shortage of skilled workers. For example, analysis by KKR Global Impact portfolio company Lightcast found that the skills requested for the average U.S. job have changed 37% since 2016, requiring a significant acceleration of upskilling. We believe our Global Impact strategy is well-positioned to invest behind these macro tailwinds.”

KKR launched its global impact strategy in 2018, aimed at investing in companies with a core product or service providing a solution to critical and relevant social or environmental challenges, as defined by the SDGs, the 17 categories of goals adopted as part of the 2030 Agenda for Sustainable Development, with the aim to protect the planet and improve the quality of life globally. The SDGs include targets such as ending poverty and hunger, improving education, and protecting the environment.

According to KKR, the strategy targets companies in which financial performance and positive societal impact are aligned, and focuses on key investment themes including Climate Action, Sustainable Living, Lifelong Learning, and Inclusive Growth, and addressing challenges ranging from climate change and reliance on non-renewable resources to lack of access to quality education, and social and economic inequality.

KKR said that the fund received backing from a diverse range of investors, including public pensions, family offices, insurance companies, and other institutional investors, and that  the firm will invest $250 million in the Fund alongside investors.

Robert Antablin, KKR Partner and Co-Head of KKR Global Impact, said:

“We launched KKR Global Impact in 2018 because we saw an opportunity to invest behind proven companies that deliver scalable, commercial solutions to global problems. Since then, that opportunity set has continued to grow, and we are thrilled with the outcomes our portfolio companies have been able to achieve. We are grateful for the support of our investors who share our conviction in this space, which we believe is well placed given the strong performance of our first fund.”

Global professional services firm EY and tech giant Microsoft announced today the launch of Green Skills Passport, a new free online education program aimed at equipping young people with skills to gain sustainability skills to find green jobs and pursue green economy opportunities.

The new program forms part of a collaboration announced between EY and Microsoft last year aimed at upskilling young people and supporting the entry or re-entry of millions of people into the workforce or to build new businesses, with a focus on sustainability, science, technology, engineering and mathematics (STEM).

Jean-Philippe Courtois, EVP and President, National Transformation Partnerships at Microsoft, said:

“We’re proud to continue growing our collaboration with EY to offer these unique programs that bridge the gap between education and employability. Through these programs, we are taking steps toward social equity and empowering leaders of the future.”

According to the companies, the new program aims to address a skills gap in sustainability, as the International Labor Organization estimates 24 million green jobs will be created by 2030.

The program includes a 10-hour virtual course, using EY-curated learning paths and delivered on the Microsoft Community Training platform, on key topics including sustainability, entrepreneurship and skills for employment. In addition to receiving an  EY and Microsoft certificate on completion, the course provides access to a database of websites and resources to search for green jobs, and includes employability skills, including resume writing and preparing for interviews​.

EY and Microsoft said that the launch follows successful Green Skills Passport pilot programs in the U.S., India and Bangladesh, with over 1,400 course completions, including 61% who plan to apply for green jobs, and 43% who plan to enroll in a university degree in sustainability or to take more related classes.

Andy Baldwin, EY Global Managing Partner – Client Service, said:

“The collaboration between EY and Microsoft extends beyond a traditional alliance, showcasing our shared dedication to generating social impact. These programs are a testament of our desire to continue equipping young individuals with the skills they need to succeed in a rapidly changing world.”

Global food and beverage company Nestlé announced today the launch of a pilot program to provide weather insurance to smallholder farmers in its Nescafé brand’s supply chain. The company said that the new program comes as climate change pressures coffee-growing areas, with smallholder farmers exposed to the risk of irregular weather conditions affecting their crops.

The new program aims to provide farmers with financial protection to cope with unpredictable weather patterns, using satellite-based climate data to determine if coffee output has been impacted by too much, or not enough, rainfall during key crop cycle phases, and issuing payments automatically to affected farmers, according to the severity of the weather.

Launched in collaboration with climate insurance specialist Blue Marble, the program is being piloted with more than 800 smallholder coffee farmers in Indonesia. Based on the results of the program, Nestlé said that it will determine whether to expand the initiatives to other Nescafé sourcing locations.

Jaime de Piniés, CEO of Blue Marble, said:

“Smallholder coffee farmers in Indonesia are vulnerable to climate risks and need access to insurance to protect against extreme weather events. We are proud to partner with Nestlé and its brand Nescafé to develop innovative ways to support the climate adaptation of smallholder coffee farmers and their families.”

According to Nestlé, the new program forms an integral part of its Nescafé Plan 2030. Launched last year, the plan outlines the coffee brand’s strategy to improve the sustainability of coffee farming, and help farmers transition to regenerative agriculture practices. Initiatives under the plan include providing farmers with training, technical assistance and high-yielding coffee plantlets, and working with farmers to test, learn and assess the effectiveness of multiple regenerative agriculture practices. The plan’s initiatives are focused in countries including Brazil, Vietnam, Mexico, Colombia, Côte d’Ivoire, Indonesia and Honduras, which represent 90% of the brand’s coffee sourcing. At launch, Nestlé said that the brand will invest over 1 billion Swiss Francs (USD$1 billion) by 2030 in the Nescafé Plan.

Marcelo Burity, Global Head of Nestlé’s Green Coffee Development, said:

“This weather insurance helps to establish a support mechanism for smallholder coffee farmers in Indonesia. It allows them to access financial resources to re-establish their crops in the event of irregular weather conditions while building resilience in coffee farms.”

Agricultural sciences company FMC Corporation announced a $30.5 million commitment to UN-backed Zero Hunger Private Sector Pledge, aimed at investing in training, technology and development for farmers in vulnerable regions, in order to advance global food security.

The pledge calls on companies to align their business efforts and investments with the UN Sustainable Development Goal 2, Zero Hunger, to create a world free of hunger by 2030.

FMC Chief Sustainability Officer Julie DiNatale said:

“FMC’s commitment to the Zero Hunger Private Sector Pledge further aligns our investments with continuous efforts to support farmers, secure the future of food and achieve the goal of Zero Hunger by 2030.”

As part of FMC’s commitment, the company will continue its existing work boosting smallholder farmers’ productivity and incomes, offering rural women and youth training opportunities, and advancing digital precision technologies across Asia, Africa, and Latin America.

The company said that a substantial part of its commitment is in precision agriculture technology, aimed at helping farmers adapt to unpredictable conditions, like evolving weather. Investments will include the launch its Arc farm intelligence platform across multiple countries, providing real-time pest insights, proactive treatment, and field monitoring equipment at no cost. FMC said that it will also invest in its Sustainable, Transformational Initiative toward Development (STRIDE) program, aimed at smallholder farmer access to innovative crop protection technologies and extension services to improve their yields, grow their incomes and enhance their quality of life.

Additional commitments involve partnerships with youth extension services in Kenya, rural women trained in beekeeping in India with G.B. Pant University, and a collaboration with Brazilian fintech startup Traive for access to credit for farmers.

DiNatale added:

“We are not going to achieve Zero Hunger by 2030 by doing things the way we’ve always done them. Innovation is essential. Involvement in this global movement creates new avenues for growth and innovation through opportunities to collaborate on ground-breaking solutions that transform the way food is produced.”