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Exclusive: Fidelity may back climate resolutions, a milestone for activists

[May 27, 2017] By Ross Kerber

BOSTON (Reuters) - Fidelity Investments may support shareholder proxy proposals calling on companies to report on sustainability matters this year, a major shift by the Boston asset manager as climate activists gain more traction at large U.S. corporations.

While Fidelity will generally vote as company managers recommend on environmental or social issues, "Fidelity may support shareholder proposals calling for reports on sustainability, renewable energy and environmental impact issues," states a new section of its proxy voting guidelines.

The guidelines were put in place in January for this spring's annual meeting season and have not previously been reported.

Fidelity spokeswoman Nicole Goodnow said Fidelity's new policy comes as client interest grows in how companies approach environmental, social and governance issues.

Other big fund companies including BlackRock Inc <BLK.N> and State Street Corp <STT.N> have also lent support lately to calls for U.S. companies to account for how climate change could affect their business.

Shareholders passed such resolutions at Occidental Petroleum Corp <OXY.N> and at utility holding company PPL Corp, <PPL.N> this month, and a high-profile test is due at Exxon's annual meeting on May 31.

Fidelity's new language marks a milestone since the family-controlled Boston fund manager, the fourth-largest U.S. fund firm with about $2.1 trillion under management, had given little indication its climate stance was also changing.

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A Fidelity Investments store logo is pictured on a building in Boca Raton, Florida March 19, 2016. REUTERS/Carlo Allegri

During the last two proxy seasons Fidelity funds opposed or abstained on every one of 30 shareholder proposals related to climate questions at U.S. companies, according to researcher Proxy Insight. BlackRock had a similar record but made clear in March that climate risk would be a top priority in its outreach to companies this year.

The new stance by the Boston firm shows "Fidelity doesn't want to be sidelined from some of the most consequential decisions being made on climate risk," said Shanna Cleveland, a director at Ceres, an advocacy group in Boston that helped coordinate the resolutions.

Filings that will show the fund managers' votes are not due for months. Fidelity's change may not have a major impact at Exxon because its funds following the new policy own about 17 million shares or about 0.4 percent of the company, ranking it 19th among investors.

Goodnow declined to say how Fidelity will vote at Exxon.

Fidelity also recently created an investment office to follow environmental, social and governance issues and signed on to the United Nations-backed Principles for Responsible Investment. Signatories pledge to consider environmental, social and governance factors and to seek disclosures.

(Reporting by Ross Kerber; Editing by Cynthia Osterman)

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