Investing in Climate Change Study l Mercer

INVESTING IN A TIME OF CLIMATE CHANGE

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    INVESTING

    IN A TIME OF

    CLIMATE CHANGE

    What every investor needs to know

This report identifies the ‘what?’ the ‘so what?’, and the ‘now what?’ in terms of the impact of climate change on investment returns. An article in the New Yorker magazine called it “the most comprehensive from an asset-allocation perspective” to date. The report will enable investors to build resilience into their portfolios under an uncertain future.

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Looking long term. Thinking about tomorrow, today.

 

SPOTLIGHT ON

Investment Implications of Climate Change

Helga Birgden, Partner and Global Leader of Mercer’s Responsible Investment business, and Russell Clarke, Mercer’s Global CIO Mainstream Assets, discuss how this complex report can help investors crystalise their thinking about the risks and opportunities related to climate change; measure the climate change risk in their portfolio in a quantitative way to provide a sense of the gravity of the problem; and create an action plan to address the risks.
 

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CLIMATE CHANGE RISK FACTORS - T R I P

Mercer has identified four climate change risk factors, which serve as “lenses” through which we can sharpen our focus on the future investment implications of climate change for investors.

 

 

TECHNOLOGY
(T)

Broadly defined as the rate of progress and investment in the development of technology to support the low-carbon economy.

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RESOURCE AVAILABILITY (R)

Defined as the impact on investments of chronic weather patterns (e.g. long-term changes in temperature or precipitation).

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IMPACT
(I)

Defined as the physical impact on investments of acute weather incidence/severity (i.e. extreme or catastrophic events).

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POLICY
(P)

Broadly defined as all international, national, and sub-national targets; mandates; legislation; and regulations meant to reduce the risk of further man-made or “anthropogenic” climate change.

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Climate Change Scenarios

The future scenarios most relevant to investors outline a range of what's possible, providing several viewpoints of how the next 35 years might play out and what we need to prepare for, starting now.

TRANSFORMATION

More ambitious climate change mitigation action that puts us on a path to limiting global warming to 2°C above pre-Industrial era temperatures this century.

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COORDINATION

Policies and actions are aligned and cohesive, keeping warming to 3°C above pre-Industrial era temperatures this century.

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FRAGMENTATION

Limited climate action and lack of coordination result in warming rising to 4°C or above from pre-Industrial era temperatures this century. This is divided into two scenarios - one assuming lower economic damages, the other assuming higher damages

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