The investment partners participating in the study include pension and wealth funds, endowments, insurers, private banks and investment managers.
Each investment partner will be given a report that applies climate change scenarios to its current asset allocation and will include guidance and recommendations on how to make its investment portfolio more resilient to the financial risks posed by climate change.
The study will look at climate scenarios with distinctive economic and market impacts which will be modelled out to 2030 and 2050.
Head of Mercer’s global responsible investment team Jane Ambachtsheer said the study is aimed at helping at helping investors make “robust, well-researched investment decisions that factor in a consideration of climate change”.
“In this study, we are helping investors identify ways to hedge against climate risks as we transition to a lower carbon economy,” Ms Ambachtsheer said.
“New data points and scientific evidence are now available, including the topical subject of the potential risk posed by so-called ‘stranded’ carbon assets.”
Louise Davidson, environmental, social and governance (ESG) investment manager at Cbus, one of the institutions involved in the study, said the industry super fund sees climate change as a significant issue for its investment portfolio over the longer term.
“We believe that participation in this project will give us insights into the range of impacts that climate change may have on our investments, and enable us to better prepare for the climate change-related challenges ahead,” said Ms Davidson.
State Super investment specialist Jo Cornwell said the project will be an opportunity to further recognise the importance of understanding climate change risks to its investment portfolios and “further develop its broader ESG approach”.
Allianz managing director of climate solutions Karsten Löffler said institutional investors require actionable information to adequately reflect climate risks and opportunities into asset allocation.
“While global warming is a fact, we face great uncertainty around policy measures, and the financial impacts in the nearer term are little understood,” said Mr Löffler.
“The Mercer study is an important step in channelling scientific and regulatory insights on climate change into the investment process and could become a standard toolbox for the strategic asset allocation.”
