Understanding climate change

Understanding climate change

What is climate change?

According to NASA, climate change is the long-term change in the earth’s overall temperature with massive and potentially permanent ramifications. The UN say that this is the defining issue of our time and our generation.

It is caused by what is known as greenhouse gas effect when greenhouse gases - such as carbon dioxide and methane – are collected in the atmosphere and reflect the warmth back towards the earth which should have gone into space. The increased warmth being reflected back in ends up going into our oceans, our forests, causing an increase of the overall temperature that we feel every day. And that’s global warming.

What causes climate change?

Over 95% of climate scientists agree that this level of concentration of greenhouse gases that we see is a result of human activities, such as the burning of fossil fuels, oil, gas and coal. As a result, alongside many other devastating effects and impacts, over the last 20 years, 19 have been the warmest ever recorded, with that trend only continuing to be seen.

In 2015, the world came together at the 21st Conference of the Parties (COP 21) - the global climate conference in Paris - and agreed to limit global warming to “well-below” 2°C, also known as the Paris Agreement.

In order to achieve this, it’s not only about governments setting limits, but companies taking actions to aim towards what is now called net zero or carbon neutrality - which is ensuring there are no additional emissions from 2050 onwards.

What can asset managers like Fidelity do to help achieve net zero?

As an active fund manager, we take a proactive approach by engaging with the companies we invest in. For example, with oil and gas majors and users of carbon dioxide, we work very closely with them to understand the sources of emissions, consider whole life carbon with costing, and disclose annual carbon footprint, in order to help them reduce the total emissions globally. Through engagement and collaboration, we can help companies transition towards net zero, with the aim to achieve the Paris objective of global warming being “well-below” 2°C.

This document is issued by FIL Responsible Entity (Australia) Limited ABN 33 148 059 009, AFSL No. 409340 (“Fidelity Australia”).  Fidelity Australia is a member of the FIL Limited group of companies commonly known as Fidelity International.

Prior to making an investment decision, retail investors should seek advice from their financial adviser. This document is intended as general information only. Please remember past performance is not a guide to the future. Investors should also obtain and consider the Product Disclosure Statements ("PDS") for the fund(s) mentioned in this document before making any decision about whether to acquire the product. The PDS is available on www.fidelity.com.au or can be obtained by contacting Fidelity Australia on 1800 119 270. The relevant Target Market Determination (TMD) is available via www.fidelity.com.au. This document has been prepared without taking into account your objectives, financial situation or needs. You should consider such matters before acting on the information contained in this document. This document may include general commentary on market activity, industry or sector trends or other broad-based economic or political conditions which should not be construed as investment advice. Information stated herein about specific securities is subject to change. Any reference to specific securities should not be construed as a recommendation to buy, sell or hold these securities. While the information contained in this document has been prepared with reasonable care, no responsibility or liability is accepted for any errors or omissions or misstatements however caused. The document may not be reproduced or transmitted without prior written permission of Fidelity Australia. The issuer of Fidelity's funds is FIL Responsible Entity (Australia) Limited ABN 33 148 059 009. References to ($) are in Australian dollars unless stated otherwise. Details of Fidelity Australia’s provision of financial services to retail clients are set out in our Financial Services Guide, a copy of which can be downloaded from our website.

© 2021 FIL Responsible Entity (Australia) Limited. Fidelity, Fidelity International and the Fidelity International logo and F symbol are trademarks of FIL Limited.

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