Mercer has announced a global expansion of its sustainable investment capabilities by an additional 30% to meet growing demand from clients looking to manage investment risk and returns linked to climate change and other ESG drivers.
The firm is expanding its sustainable investment team by adding new hires in Australia, Canada, Hong Kong, Switzerland, the US and the UK.
It also continues to increase its focus on sustainability in manager research, and has appointed Sarika Goel to the newly-created role of global head of sustainable investment research.
Mercer said it has seen substantial asset growth in its range of sustainable-oriented funds over the last 12 months – its Sustainable Global Equity Fund has more than doubled its assets to exceed $2bn (€1.7bn) at 31 March 2021.
This growth, Mercer said, is “propelled by a surge in investor interest in funds that seek to deliver strong and sustainable investment returns by positioning for the transition to an economy with low or net-zero carbon emissions as well as other sustainable investment trends”.
Helga Birgden, global business leader for sustainable investment at Mercer, said: “As the world experiences seismic environmental and societal changes, we are committed to helping our clients consider how these shifts impact their portfolios.”
She added: “Leading up to COP26, there is ambition among leading funds to demonstrate strong credentials in sustainability in their investment programmes.”
On Goel’s appointment, Jo Holden, Mercer’s global head of investment research, said that in her new role Goel will “drive the agenda for manager research coverage of investment strategies across asset classes focused on sustainable development, climate transition, impact investment and stewardship”.
Goel has been with Mercer since 2010, and has led Mercer’s coverage of sustainable themed investment strategies within listed equities.
Mercer has pledged to be carbon neutral in 2021 and to reduce its carbon emissions by 15% by year-end 2025.
Royal London imbeds RI through ‘tilts’
Royal London Asset Management is further embedding responsible investment across its propositions through the introduction of ‘tilts’ to its £23bn passive equity funds – including in its flagship ‘Governed Range’.
The asset management firm said that, as a result, the carbon intensity of the equity investment in the ‘Governed Range’, which has around 1.25 million customers’ pensions invested in it, is expected to reduce by more than 10%.
This further strengthens Royal London’s approach to responsible investment and is part of its commitment to protecting standards of living for this and future generations, at no extra charge to customers, it added.
The ‘tilted’ equity funds will increase holdings of companies with good ESG practices and reduce holdings in companies with poorer practices. These adjustments will be implemented to improve the ESG profile of the funds, without significantly impacting risk or returns, the firm noted.
Julie Scott, Royal London’s chief commercial officer, said: “This is not the time to be passive on ESG. The introduction of these ‘tilts’ to our pension range is part of investing our customers’ money responsibly to make a positive difference to the planet. We will also continue to engage with companies to promote positive change.”
She said Royal London is committed to “making investing responsibly easy”.
Hymans joins Pensions for Purpose
Hymans Robertson has joined the impact investing community Pensions for Purpose – the membership being part of the consultancy’s ongoing commitment to responsible investment.
Last month Hymans launched a new action group, the Climate Impact initiative, in order to encourage pension providers to offer climate-friendly investment options, which was supported by Pensions for Purpose.
As part of its 100th birthday celebration, the firm has also made a climate pledge and is working to halve its carbon footprint and offset its historic carbon emissions by 2025.
Simon Jones, head of responsible investment at Hymans, said: “We recognise that pension funds need to focus not just on how ESG and climate risks affect them, but also how the decisions that they take impact on the real world. Addressing challenges such as climate change requires asset owners to be instigators of change, whether that be through the strategies in which they invest or the accountability they demand from others.”
He said this aligned with the vision of Pensions for Purpose, adding that he acknowledged “the need to collaborate to achieve impact and through both our Climate Impact Initiative and now our membership of Pensions for Purpose, we are fulfilling our commitment to work with others and drive action”.
Charlotte O’Leary, chief investment officer of Pensions for Purpose, said: “Investment consultants, as the gatekeepers for pension fund investments, play a significant and pivotal role so we are incredibly pleased to have Hymans Robertson join the Pensions for Purpose community.”
Union targets net-zero investment portfolio
Union Investment has adopted a climate strategy for its investments, committing to decarbonise its portfolios by 2050 and to support the goal of a climate neutral economy as a member of the Net-Zero Asset Managers Initiative.
Hans Joachim Reinke, CEO at Union, said the asset manager would be intensifying active dialogue with companies, saying the “decisive factor here is to promote sustainable change instead of just demanding bans”.
Union said its financed greenhouse gas emissions had fallen by more than 20% since 2019, “not least due to the asset manager’s gradual withdrawal from coal financing”.
Last year Union decided to completely withdraw from the financing of coal production and coal-fired power generation. For coal production Union’s exclusion limit is currently 5%, dropping to zero by 2025; for coal-fired power generation it is currently 25%, due to drop to zero by 2035.