The managed assets covered by the net-zero goal amounted to a combined $36.4 billion as at 31 December 2020.
According to Mercer, it will need to reduce portfolio carbon emissions by 45 per cent from 2020 baseline levels within the next 10 years.
The 2050 commitment, which other investors including Aware Super, IFM Investors and UBS have signed up to, aligns with the Paris Agreement goal of limiting global temperature rises by 1.5 degrees Celsius.
Kylie Willment, chief investment officer of Mercer Pacific commented her company believes the target is in the best financial interests of superannuation members and investment clients.
“Robust analysis has informed our view that this decision is in the best financial interests of our members and clients to invest for a 1.5 degree scenario,” Ms Willment said.
“What’s more, the demand form members and clients for a rigorous and measurable approach to climate change is greater than ever.”
She added Mercer has taken the step in Australia first, part of its global road map – with other country initiatives to be declared.
The company has pledged to work with its appointed investment managers to identify and manage a staged emissions reductions plan, oversee portfolio allocations to climate solutions and steward an increase towards an energy transition across its funds.
“The greatest change is expected in equity and real asset portfolios, where members invested in these growth assets typically have timeframes aligned to carbon neutrality goals over the long-term,” Ms Willment said.
Mercer has also promised it will monitor progress on its emissions and carbon intensity reductions annually, along with analysis on transition capacity and allocation to green solutions.
