Updated with correction
Fidelity International launched a proprietary sustainability ratings system, the firm said Wednesday.
The new system will give companies, in 99 subsectors comprising the investment universe, a rating of A to E based on an assessment, relative to its subsector peers, by the company's 180 equities and fixed-income analysts.
Rather than potentially excluding all companies in sectors with challenging ESG profiles, the system looks to distinguish the best-in-class performers in each sector — promoting engagement over exclusion, said Jenn Hui Tan, the firm's Singapore-based head of capital markets and corporate governance, in an interview.
Other firms, including MSCI and Sustainalytics, offer third-party ESG ratings, which Fidelity uses, but those offerings are highly data driven — and consequently backward-looking, Mr Tan said.
Building instead on the foundation of the corporate access Fidelity's analysts have, with more than 16,000 company meetings over the past year, will allow for more forward-looking views on companies' sustainability profiles, Mr. Tan said.
The ratings will be fully integrated into Fidelity's investment process. They won't be made available to other managers, Mr. Tan said.