As a consultant, Mercer was a founding signatory to the Principles for Responsible Investment (PRI) in 2006, when we also helped shape its original statements and aims. We were one of the first consultants to pioneer responsible investment, and we have worked both with the PRI and other international organisations to promote best practice around the world for almost two decades.
Now, in 2020, we are proud to have been awarded an A+ and six As from the PRI for our $306bn1 of assets under management in investment solutions across public and private markets.
Through our investment solutions platform, not only do we allocate our clients’ portfolios to a wide range of managers that have been highly rated and selected by our in-house research team, but we help them avoid the investment and reputational risks associated with poor ESG practices, while also seeking opportunities that emerge from new trends and regulatory changes.
We are pleased that the A+ rating for strategy and governance and A ratings for all six asset classes were awarded in our first year of accreditation. It reflects the efforts of many team members to achieve the necessary consistency all across regions, and who are committed to continually improving on this result.
But in the rapidly moving world of responsible investment, no leader can afford to stand still.
We will continue to draw on our vast amount of forward-looking intellectual capital to implement our advice and allocate institutional portfolios across our network. By looking to the future, as an adviser to more than $15tn2 of assets, we can help our clients stay ahead of regulatory and public policy decisions around responsible investment.
Q&A with Hooman Kaveh, Global Chief Investment Officer, and Jillian Reid, Senior Responsible Investment Specialist
With teams around the world researching the variety of roles responsible investment plays in portfolios, along with the changing face of regulatory and public expectations, Mercer has generated a wealth of forward-looking datasets and insights that we apply to our approach to sustainability.
Q. Why does Mercer think responsible investment and sustainability matter for investment portfolios?
A. Our heritage is investment consulting. We have been advising and creating investment plans for all types of investors for 75 years - we celebrated our 50th anniversary in the UK in July 2020.
Before we offer advice to any client on any subject, we are sure to have researched, studied and found evidence for why we think a certain way.
With responsible investment, our process is no different. More than 15 years of research, data and real-life experience informs our belief that this is the best approach for our clients.
While every Mercer client is different, there are commonalities and themes relevant to them all. One of these commonalities is responsible investment.
We apply responsible investment approaches within portfolios to identify risks across environmental, societal and company governance factors, and to spot emerging opportunities too. These forward-looking factors have not traditionally been captured in financial metrics, which often only capture what has happened in the past. But by applying these metrics, our responsible investment approaches anticipate change that might affect a company’s operations or cause reputational damage across a broad time horizon. Either or both of these could impact the company’s financial standing and therefore, our clients’ investments.
This means understanding the potential risk and seeking to anticipate it is of huge value to all our investment clients – and it is our fiduciary duty to help them manage it.
We believe, and have lots of evidence to support the view, that responsible investment is a key risk management tool to investors in the 21st century. As an example, climate change and the required transition to a low carbon economy, is integral to our advice and solutions. Our industry-leading global responsible investment business3 has provided vital support to clients, who are navigating this major economic change, not only by reducing risk but also identifying opportunities.
We help our clients deploy capital in companies that have committed to work more sustainably, using a range of funds.
Q. As Mercer is a global firm, is there one responsible investment policy for all clients?
A. Although we believe the topics within responsible investment broadly apply to everyone, we understand that each region, sector and type of investor takes their own approach to addressing them.
This may be due to demands by stakeholders, or legacy issues around capital. Our clients may also operate in a region where responsible investment is a key focus for a regulator, while other policymakers are looking elsewhere.
As we work with investors all over the world, we have learned the intricacies of each market. This means when we put our theory into practice, through advising our clients or implementing their portfolios, we adjust to their needs.
Typically the basis for all responsible investment approaches integrates environmental, social and governance factors, along with good stewardship practices in voting and company engagement. However, there is much more variability by client and region on sustainability-themed allocations and exclusions of companies and sectors.
We have found real value in collaborating with a range of investors from all sectors and all jurisdictions. It has helped us understand how we can make our responsible investment approach work for our clients.
The A+ rating for strategy and governance and A ratings for all six asset classes we were recently awarded by the PRI for our investment solutions should give all our clients confidence in the consistently high standards we’ve set for all regions – and that they are applicable to all.
Q. How are investment solutions al Mercer different to consulting – and what does that mean for responsible investment?
A. Our investment solutions platform supports a range of institutional clients to implement their bespoke strategies, but within responsible investment it can do more on the sustainability-themed and exclusions components, too.
For example, we can draw on our huge amounts of intellectual capital to design a responsible investment policy that aligns with your values and beliefs. Through our constantly updated, forward-looking research, we can help our clients identify where opportunities might arise – and where their portfolios may be at risk.
Through the robust governance framework our investment solutions provide, we can also define and allocate the processes that are needed to stay on top on these policies. Some clients want to update them personally, while others prefer to use our global research team’s expertise.
Above all, we understand that your approach to ESG remains entirely your choice. You decide what you want to implement and when. We design our solutions to fit your precise objectives, and we are ready to help you navigate your responsible investment journey, whenever and however you need us.
We hope you have found this Q&A useful and that it provides some insight into how Mercer encourages many of its clients to think and invest more ethically, responsibly and sustainably. If you would like to know more, please contact your local Mercer representative, or you may contact us at MercerInvestmentSolutions@mercer.com
Global Chief Investment Officer
Hooman is the Global Chief Investment Officer for Mercer's investment solutions. Hooman leads a team of investment professionals who are responsible for developing and implementing all aspects of the fiduciary investment process, including investment strategy, asset allocation and de-risking, fund manager selection, monitoring and blending as well as portfolio implementation.
Hooman has been in his current role since 2017 having previous been the European CIO for Mercer’s investment solutions since 2006 when he joined Mercer to help set up this area in Europe. Prior to that, Hooman was Chief Investment Officer at one of Ireland's largest financial services companies whose investment division he joined in 1990. He has held various investment roles, including Portfolio Manager and Head of Quantitative Investments, prior to becoming CIO.
Hooman graduated from Trinity College Dublin in 1986 with an honours degree in microelectronics engineering. He then worked in the research and development laboratories of Philips in Eindhoven, the Netherlands. He left Philips in 1989 to complete an honours MBA degree in 1990 at Trinity College Dublin. Hooman also holds an MSc master’s degree with honours from Dublin City University in investments and treasury management, which he gained in 1993. He has also lectured on investment management subjects on that programme.
Senior Responsible Investment Specialist
Jillian is a Principal in Mercer’s responsible investment team, advising pension funds and other institutional investors on how to integrate environmental, social, and governance (ESG) factors, sustainability trends, climate change, and stewardship, within investment processes. She has 20 years’ experience in financial services. She began at Mercer in 2004, transitioning to responsible investment in 2011, and has worked in both the Sydney and London office. Prior to Mercer, Jillian spent five years at an Australian multi-manager, after beginning her career in teaching.
At Mercer, Jillian contributes to new intellectual capital and integrating responsible investment within Mercer globally, including within our investment solutions. Jillian was project manager and co-author for Mercer’s 2015 Investing in a Time of Climate Change report and ‘The Sequel’ in 2019; she has written and presented on water, too much and too little; and helped multiple Boards to balance risk, return, and reputation implications for sensitive investment topics.
Jillian holds a Master of Arts in Development Studies from the University of New South Wales; a Bachelor of Arts and a Diploma of Education, both from the University of Newcastle; and a Graduate Diploma in Applied Finance and Investment from the Financial Services Institute of Australasia.
1 Source: Mercer, June 2020
2 Source: Mercer, November 2019.
3 Mercer Recognized for Firm-Wide and Individual ESG Investment Consulting Excellence,” available at https://www.mercer.com/newsroom/mercer-recognizedfor-firm-wide-and-individual-esg-investment-consulting-excellence.html
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