SINGAPORE - Mercer has launched a solution for investors looking to limit the environmental impact of their portfolios.
The Analytics for Climate Transition solution helps investors construct climate resilient portfolios over a multi-year time-frame, the firm said.
This is aimed at limiting temperature increases to 1.5 degrees Celsius above pre-industrial levels, as outlined in the Paris Agreement.
The solution is being offered to Mercer’s investment consulting clients around the world. The New York-headquartered firm, which operates in over 130 countries, manages over $304.5bn in assets for investment solutions clients.
Helga Birgden, global business leader for responsible investment, said: ‘Many investors are not yet equipped to invest in a de-carbonising economy, and some don’t know where to start.
‘Our analytics and advice will help investors transition their portfolios to take on the challenges of managing climate risk, in their endeavour to meet return objectives while staying on target for a net-zero outcome.’
Mercer said the solution uses ‘multiple data providers and metrics’ to access carbon risk, without going into specifics.
A portfolio’s investments will be ranked, with the lowest being low transition capacity or grey investments. This is followed by those have zero to low carbon risk.
Then there are green investments, that are already providing climate solutions. ‘The majority of companies in investor portfolios fall somewhere in between the two sides,’ Mercer said.
Clients can assess opportunities, set targets and construct plans via the new solution to limit risks.
Mercer’s solution is one in a growing market, as investors step up focus on ESG.
In February, MSCI has created a tool allowing users to assess their exposure to climate-related risks. This was targeted at financial institutions including banks, asset managers and insurers.
Avaloq launched an ESG solution for banks and wealth managers earlier this month.
This will help them build tailored and ESG-compliant portfolios for clients, amid increasing demand for ESG exposure, the software company said.