Fidelity - ESG Analyst Survey: Bridging the gap to net zero

Achieving net zero is vital for the long-term survival of our planet, but it continues to be one of the most difficult challenges the world faces today. According to Fidelity International's annual ESG Analyst Survey, companies are actively seeking collaboration with stakeholders in order to enhance their sustainability initiatives. These companies are aware of the ever-changing physical, economic, and regulatory landscape they operate in. Through its global team of analysts, the report draws on insights from 20,000 company meetings to identify key ESG trends in the corporate landscape.

The poll found that 68 % among the companies that Fidelity's experts consult with have responded to engagement initiatives in the past year. Across all regions, Japan-based organisations were found to be most willing to engage, followed by EMEA/Latin America and Asia Pacific. However, the survey also highlights that only 43% of companies currently have a credible net zero goal for 2050, against last year’s 57%, indicating the need to accelerate zero-emission plans. The survey further identifies three key areas expected to drive improvements in companies' environmental practices: regulation, government support, and shareholder action. Over the past 12 months, the importance of regulation in the ESG field has been emphasized by the introduction of new guidelines such as the International Sustainability Standard Board (ISSB) and the Corporate Sustainability Reporting Directive (CSRD). However, these legal frameworks require government support to incentivize companies’ adoption of green strategies Examples of such support include the European Green Deal and the US Inflation Reduction Act. 

47% of interviewed analysts believe many companies to still promote better ESG credentials than their actions justify, however this trend is expected to change as more and more companies develop long-term remuneration incentive systems that tie management pay with the company’s progress on ESG targets. In this regards, Jenn-Hui Tan, Chief Sustainability Officer at Fidelity International comments: “While companies may be lagging on their transition plans, there is growing awareness of the threats posed by a warming climate and deteriorating ecosystems, providing companies with a strong incentive to stay engaged.”