Mercer has targeted net-zero 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.

The company said this represented a combined total of £31.5bn in assets under management as of 31 December 2020, adding that it would seek to achieve its net-zero goal by reducing portfolio relative carbon emissions by at least 45 per cent from 2019 baseline levels by 2030.

Following the creation of a climate transition plan, Mercer will be work 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.

Mercer Europe, Asia, Middle East and Africa chief investment officer, Niall O’Sullivan, 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.”

Mercer UK head of responsible investment, Kate Brett, said: “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.”

The firm has recently made similar climate commitments regarding its Australian Funds and the Mercer-managed investment options within Mercer Super.

Mercer added that its progress at reducing absolute emissions and carbon intensity reductions would be monitored annually, together with analysis on transition capacity and allocation to green solutions, using the company’s Analytics for Climate Transition (ACT) tool.

Brett continued: “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.”

Mercer joins a host of other companies in aligning its goals with those of the Paris Agreement, with asset managers representing $9trn (£6.8trn) in assets under management having committed to the goal of net zero carbon emissions by 2050 back in December 2020.

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