Climate change analytics and advice helps prepare institutional portfolios to adapt to a net zero economy
Australia, 19 November 2020 –Mercer, a global leader in redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being, today announced the launch of climate transition analytics and advice for institutional investors who want to transition to a 1.5°C scenario of global warming as outlined in the Paris Agreement. Climate change science has shown that to halt climate change, carbon emissions have to stop completely. ‘Net zero’ means that any emissions are balanced by absorbing an equivalent amount from the atmosphere.
The solution, called Analytics for Climate Transition (“ACT”) will help investors construct climate resilient portfolios on a multi-year timeframe, as 1.5°C requires a 45% emissions reduction by 2030. ACT is now being offered to Mercer’s investment consulting clients worldwide and will be leveraged to support climate transition strategies across its $304.5 billion USD global assets under management on behalf of its Investment Solutions clients.
“Many investors are not yet equipped to invest in a decarbonising economy, and some don’t know where to start. Our analytics and advice will help investors transition their portfolios to take on the challenges of managing climate risk, in their endeavor to meet return objectives while staying on target for a net-zero outcome,” said Helga Birgden, Global Business Leader, Responsible Investment, Mercer.
ACT was developed because institutional investors are seeking ways to assess the companies they are invested in with respect to their commitment and ability to, transition to a net zero economy by 2050, with an important milestone of 45% emissions reduction by 2030. Through ACT, Mercer can help investors set portfolio investment baselines; assess portfolio opportunities; establish targets and produce implementation plans that can be integrated with strategy and portfolio construction decisions.
“Mercer was a pioneer in developing climate scenario analyses to help investors set strategies for diversified portfolios.The climate transition advice and analytics is a natural next step for us and supports our clients to address climate change. Importantly, when working with clients to position their portfolios for transition we leverage our global investment research, our capabilities and our knowledge,” said Jillian Reid, Senior Responsible Investment Specialist, Mercer.
Mercer’s framework and analytics draw on multiple data providers and metrics to assess portfolios across a spectrum of carbon risk, with portfolios ranked from high carbon, low transition capacity (grey investments) to investments that are low carbon risk/zero carbon already, or are providing climate solutions (green investments). The majority of companies in investor portfolios fall somewhere in between the two sides.
Mercer’s climate change research and guidance is a Mercer-wide collaboration and spans Research, Advice and Investment Solutions. Mercer’s Responsible Investing Pathway maps out the full scope of the responsible investment advisory services Mercer offers, structured around integrating ESG and climate change into the core stages of investment: beliefs, policy and process, and portfolio implementation.
Mercer is a global leader in Responsible Investment advice and solutions. Mercer’s Investment Solutions were rated A+ for the approach to ESG strategy and governance by the Principles of Responsible Investment (PRI) in 2020, with A ratings across all asset classes. This endorsement reinforces how RI integration across our investment solutions has now reached consistently high standards across all regions. Locally, Mercer Investments Australia was also recognised as an industry leader among investment managers by the Responsible Investment Association Australasia (RIAA) in its 2020 Responsible Investment Benchmark Report.
Mercer believes in building brighter futures by redefining the world of work, reshaping retirement and investment outcomes, and unlocking real health and well-being. Mercer’s more than 25,000 employees are based in 44 countries and the firm operates in over 130 countries. Mercer is a business of Marsh & McLennan (NYSE: MMC), the world’s leading professional services firm in the areas of risk, strategy and people, with 76,000 colleagues and annual revenue of USD $17 billion. Through its market-leading businesses including Marsh, Guy Carpenter and Oliver Wyman, Marsh & McLennan helps clients navigate an increasingly dynamic and complex environment. For more information, visit www.mercer.com.au. Follow Mercer on Twitter or LinkedIn.
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