In 2011, Mercer published its first global research report on climate change and its implications for strategic asset allocation, in partnership with a number of our institutional investment clients. In June 2015, we released a major update, Investing in a Time of Climate Change (“the 2015 Report”), another client collaboration. We are now publishing Investing in a Time of Climate Change — The Sequel (“the Sequel”).
Investing in a Time of Climate Change – The Sequel (the Sequel) documents Mercer’s latest climate scenario model for assessing the effects of both climate-related physical damages (physical risks) and the transition to a low-carbon economy (transition risks) on investment return expectations. The Sequel models three climate change scenarios, a 2°C, 3°C and 4°C average warming increase on preindustrial levels, over three timeframes - 2030, 2050 and 2100.
Since 2015, there have been many environmental, scientific, political and technological developments that continue to evolve our understanding of the climate-change-related investment context. In response to these developments and client demand, Mercer has updated its climate scenario model and is proud to publish the Sequel. The Sequel focuses on what is new and the “why, how and what” for investors, providing practical advice, including peer case studies.
The findings strengthen the argument for investor action on climate change and suggest greater attention is required on how investors will actively support the transition to a 2°C scenario – as “Future Makers”. Fiduciaries – motivated by the economic and social interest of their beneficiaries and clients – have the opportunity, and arguably the obligation, to use their portfolios and their influence to help guide us towards this more-economically-secure outcome. We look forward to the opportunity to support our clients in incorporating climate change throughout the investment process and build climate resilient portfolios.
Mercer’s Climate Change work is a business wide collaboration, led by the Responsible Investing team. Mercer’s Responsible Investing Pathway maps out the full scope of the RI services Mercer offers, structured around integrating RI into the core stages of investment; Beliefs, Policy and Process, and Portfolio Implementation.
Investing in a Time of Climate Change
Tony English, Senior Investment Consultant and Jillian Reid, Senior Responsible Investment Specialist, discuss the findings of Mercer’s recently published report – Investing in a time of Climate Change.
Investing in a Time of Climate Change - The Modelling
Rob Bailey, Director of Climate Resilience, MMC Insights, and Steven Sowden, Senior Investment Consultant, Mercer, discuss the modelling that has underpinned Mercer's "Investing in a Time of Climate Change - The Sequel" report.
Karen Lockridge, Responsible Investment Consultant, explains the key milestones for Mercer’s 2°C, 3°C, and 4°C scenarios to New York senior investment consultant, Neeraj Baxi. Karen gives examples that illustrate the pace of change for the low-carbon transition and the severity of physical damages for each of the three Mercer scenarios.