Oslo, 31 March 2021 -- 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[ii].
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.
For further information on solving investor challenges with sustainability in mind, please visit our website.
Notes to Editors
Mercer is a business of Marsh McLennan, which has pledged to be carbon neutral in 2021 and to reduce its carbon emissions by 15% by year-end 2025. These commitments complement important climate work occurring across the company from helping clients measure and manage the risk associated with natural perils in a changing climate to supporting their transition to a low carbon economy.
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 approximately 25,000 employees are based in 43 countries and the firm operates in 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 over $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. Follow Mercer on Twitter @UKMercer. In the UK, Mercer Limited is authorised and regulated by the Financial Conduct Authority.
[i] Defined as absolute carbon emissions, per $M of FUM and Scope 1&2 for 11 multi-asset Mercer Funds in aggregate and for each participating client with a discretionary growth portfolio. – for clients with discretionary growth portfolios, total client AUM has been considered here.
[ii] Per dollar of assets under management. While the funds continue to maintain an investment objective of seeking long-term growth of capital and income, they also promote environmental characteristics though progressive decarbonisation with a view to achieving net zero emissions by 2050.