Key Takeaways
- • The share of European pension schemes evaluating how climate change risks will affect their portfolios rose from 14% to 54% over the past year, according to a Mercer poll announced on 26 August 2020.
- • Mercer surveyed 927 institutional investor clients across 12 countries, representing €1.1trn in assets.
- • 89% of schemes now report on portfolio risks tied to holdings with poor environmental, social and governance (ESG) practices.
- • Mercer's Jo Holden argues ESG factors "should not be afterthoughts" and suggests quick wins can come from switching a relatively small proportion of investments.
Summary
The percentage of European pension schemes considering how climate change risks will affect their portfolios has risen sharply, from 14% to 54% over the past year, according to a new poll by investment consultant Mercer. The findings were announced on Wednesday, 26 August 2020.
Mercer polled 927 institutional investor clients in 12 countries, with combined assets of €1.1trn. Research was conducted between the fourth quarter of 2019 and the first quarter of 2020. The firm found that 89% of schemes now report on the risks in their portfolios relating to holdings with poor environmental, social and governance practices.
Jo Holden, European director of strategic research at Mercer, described the increase in ESG risk awareness as encouraging. She said ESG considerations "should not be afterthoughts, but rather actively considered in all investment strategy decisions." Holden added that awareness is growing as more schemes and sponsoring companies see how ESG risks may affect investment returns and public perception of the scheme or company.
Mercer has increasingly engaged clients on climate change risks in recent years, the firm said in its accompanying statement. It has encouraged schemes to develop a climate transition schedule for their portfolios and to adopt responsible investment indices. Holden noted that portfolios can often be improved from an ESG perspective through relatively minor steps.
Mercer polled 927 institutional investor clients in 12 countries, with combined assets of €1.1trn. Research was conducted between the fourth quarter of 2019 and the first quarter of 2020. The firm found that 89% of schemes now report on the risks in their portfolios relating to holdings with poor environmental, social and governance practices.
Jo Holden, European director of strategic research at Mercer, described the increase in ESG risk awareness as encouraging. She said ESG considerations "should not be afterthoughts, but rather actively considered in all investment strategy decisions." Holden added that awareness is growing as more schemes and sponsoring companies see how ESG risks may affect investment returns and public perception of the scheme or company.
Mercer has increasingly engaged clients on climate change risks in recent years, the firm said in its accompanying statement. It has encouraged schemes to develop a climate transition schedule for their portfolios and to adopt responsible investment indices. Holden noted that portfolios can often be improved from an ESG perspective through relatively minor steps.
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