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

 

 

 

Climate change is driving the need to transition to a zero-emission economy, and investor and corporate awareness is increasing rapidly. Many investors want to understand the downside risks they may face as a result of the transition — as well as any opportunities they have to allocate to companies generating sustainable and green revenues. In particular, companies and investors want to align with the targets of the 2015 Paris Agreement, including ensuring temperatures do not increase past the 1.5°C threshold.

 

 

Consistent with our goal to place sustainability at the centre of our investment approach, Mercer New Zealand has committed to a target of net-zero absolute carbon emissions by 2050 for its investment funds. To achieve this, Mercer expects to reduce portfolio carbon emissions by 45 per cent from 2020 baseline levels by 2030.

 

Why is sustainable investing important?

We’ve already had a 1°C increase in average global temperatures on preindustrial averages. According to current science, in as few as 30 years, we could soon be facing a 2°C increase — a climate humans have never experienced and one that hasn’t occurred on earth for millions of years. This is described by the Central Banks and Supervisors Network for Greening the Financial System (NGFS) as society living in a “hothouse world. This crisis puts the need to address transition squarely on today’s to-do-list alongside a 1.5°C global climate ambition and supporting the UN’s “decade of delivery.”

Aotearoa New Zealand Investor Coalition for Net Zero

Mindful Money recently launched a report highlighting the shift needed to move to a clean economy. 

Aotearoa New Zealand Investor Coalition for Net Zero

 

 

 

Committed to net-zero

Find out more about our commitment, in a short video by Mark McNulty, International Head of Clients

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“Many investors are not yet equipped to invest in a decarbonizing economy and don’t even know where to start. Our analytics and advice help all investors transition their portfolios to address the challenges of managing climate risk, meeting return objectives while staying on target for a net-zero outcome.” – Helga Birgden, Global Leader Sustainable Investment
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What can investors do to reduce emissions?

 

A transition action plan is a natural next step for investors that have undertaken climate scenario analysis and are ready to move the needle in the right direction. Our decade-long investment experience with climate change scenario analysis and modeling and studies show that it’s in investors’ best interests to transition from our current 3°C temperature increase trajectory, ideally to a 1.5°C scenario. It’s also possible to respond to the urgency and find opportunities that will benefit investors.

 

Mercer, among others, has undertaken extensive portfolio modeling and identified the potential to capture a “low-carbon transition premium.” Scenario analysis is the foundation of the transition plan because we are asking what companies will need to do now to face the future. 

 

Mercer’s Analytics for Climate Transition (ACT) tool helps investors use this analysis to identify not just the losers of today but the winners of tomorrow, enabling them to engage with their managers and capitalize on the transition ahead.

 

The analysis is designed to provide investors with a portfolio wide view of the emissions reduction needed to meet a net zero target and to plan the changes required to the portfolio in order to transition. The analysis includes geographic, sector, manager and selected stock drivers. The results are intended to be a guide investors who want to make a change, to assess where emissions reductions could come from, compare different strategies, engage with asset managers and plan for and make portfolio changes to reduce emissions. The goal is to reduce the greys in a portfolio where there is high stranded asset risk, and grow the green solutions and steward the assets that are ‘in-between’.

Climate helping investments

Mindful Money Webinar: How to use your investments to Help the Climate

At the recent Mindful Money webinar, a team of experts discussed how your KiwiSaver and investment funds can play a role in reducing greenhouse gas emissions.

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