Professional services, consulting and investment solutions provider Mercer announced today a new sustainability commitment, with the launch of a target to achieve net-zero absolute carbon emissions for UK, European and Asian clients with discretionary portfolios by 2050.

Mercer also set an interim target to reduce portfolio relative carbon emissions by at least 45% from 2019 baseline levels by 2030, on the pathway to its longer-term goal.

The new commitment, covering approximately $44 billion of AUM as of December 2020, aligns with a 1.5 degree Celsius limit on global temperature increases and the Paris Agreement’s ambitions, according to the company.

Niall O’Sullivan, Chief Investment Officer of Mercer Europe & Asia, the Middle East and Africa (AMEA), said:

“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’s new net zero target follows the firm’s launch in November 2020 of Analytics for Climate Transition (ACT), an analytics and advice solution designed for institutional investors who want to transition to a 1.5°C climate scenario. ACT was developed to enable institutional investors to assess the companies they are invested in with respect to their commitment and ability to, transition to a net zero economy.

Mercer stated that it will work 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. 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.

Kate Brett, UK Head of Responsible Investment at Mercer, 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.”