Mercer: asset owners still in ‘early stages of setting climate targets’
Large asset owners are still in the relatively early stages of setting climate targets, but momentum is building as the majority of incorporate sustainability into their investment strategies.
Most have either set, or plan to set, a science-based net zero target by at least 2050. Nevertheless, there is less commitment among capital owners to nearer term targets and investment issues such as biodiversity and impact investing.
Those are the main main conclusions in Mercer’s 2024 Large Asset Owner Barometer, a new analysis of over 60 of the world's largest asset owners, collectively having around $2 trillion in assets under ownership.
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The findings come "at a time of significant uncertainty in global markets and in the face of systemic risks, a tightening monetary backdrop and increased focus on climate transition among them," said Annabell Siem Mathiesen, Mercer's global head of sustainable investments.
She said that "the majority of asset owners now incorporate sustainability into their investment practices ... however, there is less commitment to nearer-term targets and very little focus on issues such impact investing within investment processes."
"Among asset owners, there is less commitment to nearer-term targets and very little focus on issues such impact investing."
Transition targets
Of the large asset owners who have made sustainable targets and goals a part of their investment approach, over half have already set transition targets, and a further 11% told Mercer that they will do so in 2024.
An additional quarter of the asset owners the firm spoke to plan to set transition targets in the next two years, while only 8% do not plan on setting climate transition targets at all.
Of the investors which do have explicit reference to or separate policies that address how they incorporate specific sustainability themes into their process, 87% included climate change, 71% launched net zero targets and 53% incorporated policies related to labour practices, health and safety and human rights.
Siem Mathiesen pointed out that "we are moving from a target-setting phase to an implementation phase, but this is unlikely to happen at the same pace."
She said the analysis looked at how some of the world’s largest asset owners are allocating capital and managing risk.
"The barometer seeks to advance discussion and collaboration around the asset allocation decisions, risk management and governance practices of large asset owners."
She concluded that "large asset owners are confident in their portfolios' resilience despite market uncertainty."
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