Investment - Articles - Mercer accelerates portfolios with net zero carbon emissions


Consistent with its goal to place sustainability at the centre of its investment approach, Mercer has committed to a target of net-zero absolute carbon emissions by 2050 for UK, European and Asian clients with discretionary portfolios and the majority of its multi-client, multi asset funds domiciled in Ireland[i]. This represents a combined GBP 31.5/EUR 36.7 / USD 43.7 billion in assets under management as at 31 December 2020. To achieve this, Mercer plans to reduce portfolio relative carbon emissions by at least 45% from 2019 baseline levels by 2030.

 The commitment aligns with targeting a 1.5 degree Celsius limit on global temperature increases and the Paris Agreement’s ambitions.

 Niall O’Sullivan, Chief Investment Officer of Mercer Europe & Asia, the Middle East and Africa (AMEA), commented: “We are committing to investing for a 1.5 degree scenario because robust analysis tells us it is in the best financial interests of our members and clients. Another contributing factor is the increasing demand for a rigorous and measureable approach to climate change investment that we see from pension scheme members as well as clients.”

 “The target is underpinned by our well-established climate change beliefs and scenario analysis over multiple years and is supported by a climate transition plan. We are confident that through preparations completed across asset classes emissions in our funds can be reduced while delivering on our investment objectives.”

 Kate Brett, UK Head of Responsible Investment at Mercer, added: “As leaders in sustainability across research, advice and solutions, we are excited to be taking such a significant step in Europe and AMEA as part of our global roadmap to supporting clients to achieve net-zero.”

 Following a climate transition plan, Mercer will be working closely with its appointed investment managers to identify and manage a staged emissions reduction plan, oversee portfolio allocations to climate solutions, and steward an increase in transition capacity across the funds. The firm recently made a similar commitment for its Australian Funds and the Mercer-managed investment options within Mercer Super.

 “Our proprietary Analytics for Climate Transition (ACT) helps set a transition pathway and position portfolios for change. The analysis identifies portfolio companies that are high carbon and low transition through to low or zero carbon and high transition. This assessment allows us to manage high carbon risk and to engage with companies on their ability to support a zero emissions target,” said Ms Brett.

 Progress on absolute emissions and carbon intensity reductions will be monitored annually – together with analysis on transition capacity and allocation to ‘green’ solutions – using the Analytics for Climate Transition (ACT) tool, launched by Mercer in November 2020.
  

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Mercer accelerates portfolios with net zero carbon emissions
Consistent with its goal to place sustainability at the centre of its investment approach, Mercer has committed to a target of net-zero absolute carbo

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