Mercer New Zealand commits to achieve net-zero absolute carbon emissions target by 2050 

New Zealand, 6 July, 2021 – Consistent with its goal to place sustainability at the centre of its investment approach, Mercer New Zealand has committed to a target of net-zero absolute carbon emissions by 2050 for its investment funds^[i]. This represents a total of $10 billion NZD in assets under management as at 31 May 2021. To achieve this, Mercer expects to reduce portfolio carbon emissions by 45 per cent from 2020 baseline levels by 2030^[ii].

The announcement follows similar commitments made for the Mercer Funds in Australia, and Mercer’s discretionary portfolios in UK, Europe and Asia.

The commitment aligns with targeting a 1.5 degree Celsius limit on global temperature increases and the Paris Agreement’s ambitions. It is also consistent with New Zealand’s Climate Change Response (Zero Carbon) Amendment Act 2019.

Ronan McCabe, Chief Investment Officer of Mercer New Zealand, said while the target would resonate with the values of New Zealanders, Mercer believed it was in the best financial interests of members and clients.

“Time and time again, New Zealanders have made clear that sustainable investing is a priority for them. We’ve made improvements to our products and portfolios to reflect this, including our recent announcement that our KiwiSaver funds would be invested in more focused socially responsible investment strategies,” Mr McCabe said.

“But, underpinning these shifts towards a greater commitment to sustainable investing is our fiduciary responsibility. Our research over many years and across asset classes has supported our view that investing for a 1.5 degree scenario is expected to lead to better outcomes for investment portfolios.

“We’re excited to be taking these significant steps in New Zealand, as part of our global roadmap to supporting clients to achieve net-zero. We have a robust climate transition plan in place to track and measure our activity, and we look forward to sharing our progress with our clients and members. We see the transition to a lower carbon portfolio as a journey, beyond just exclusions, and we are looking to continually enhance the management of our clients’ portfolios for what we see as a systemic risk,” he said.

Under Mercer’s Climate Transition Plan, the firm will be working 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 Mercer’s Analytics for Climate Transition (ACT) tool, launched in November 2020.

Mercer is a business of Marsh McLennan, which has pledged to be carbon neutral in 2021 and to reduce its carbon emissions by 15 per cent by year-end 2025. These commitments complement important climate work occurring across the company, from helping clients measure and manage the risk associated with natural perils in a changing climate to supporting their transition to a low carbon economy.

^{[1] Defined as absolute carbon emissions, per $M of FUM and Scope 1&2 for the Mercer Investment Trusts New Zealand in aggregate.}

^{[1] Per dollar of assets under management.}