Responsible Investment

Responsible Investment Policies

Sustainability Policy:

This Policy sets out Mercer’s key principles and approach in relation to all sustainability related topics.

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Remuneration Policy:

This Policy set out how ESG performance is rewarded within Mercer.

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Sustainability related disclosures

Principal Adverse sustainability impacts statement:

This statement summarises how principal adverse impacts on sustainability factors are considered as part of the investment decision making & advisory process.

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Sustainability-related product disclosures:

Mercer Aspire offers Article 8 and Article 9 investment options, as categorised by the Sustainable Finance Disclosure Regulation, as follows:

Aspire Moderate Growth Portfolio / Aspire Adventurous Portfolio / Aspire Cautious Growth Portfolio / Aspire Progressive Portfolio / Diversified Growth Fund / Diversified Growth Partial Hedge Fund

These Portfolios / Funds seek to promote environmental and social characteristics within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. They invest in a diversified mix of sub-funds, the majority of which have a stated objective to seek to mitigate the impact of climate change through progressive decarbonisation within their portfolio (as set out in the table below). These sub-funds will seek to reduce carbon emissions with a view to achieving net zero carbon emissions by 2050, and with a view to achieving at least a 45% reduction from 2019 levels by 2030. A proprietary tool is used to measure the decarbonisation strategy for the sub-funds including metrics such as carbon emissions intensity, absolute carbon emissions and fossil fuel reserves. In addition, the sub-funds have exposure to sustainable investments.

Active Sustainable Equity Fund

The Fund seeks to promote environmental and social characteristics within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation. The investment managers selected for this Fund are limited to those strategies that have received the highest and second highest ESG ratings from Mercer’s global manager research team i.e. strategies considered best-in-class, which are responsive to ESG risks as well as opportunities, and those with strong stewardship processes.  The Fund seeks to combine strategies that embed environmental and/or social considerations in their investment processes while also adhering to good governance standards. 

Passive Sustainable Equity Fund

The Fund has sustainable investment, namely, a reduction in carbon emissions, as its objective within the meaning of Article 9 of the Sustainable Finance Disclosure Regulation. The Fund is passively managed and seeks to achieve its objective by investing predominantly in global equities that as far as possible reflect the component equity securities of the selected sustainable equity index. The Index enhances exposure to positive ESG factors and seeks to provide low carbon emission exposure with a view to achieving the long term global warming objectives of the Paris Agreement.

Mercer Aspire

Overall, approximately two thirds of assets invested under Mercer Aspire are invested in funds which seek to promote environmental and social characteristics within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation as at 10 March 2021. As such, Mercer Aspire is categorised as a financial product which seek to promote environmental and social characteristics within the meaning of Article 8 of the Sustainable Finance Disclosure Regulation.

Taxonomy related disclosures

Sustainable funds (Article 8 & Article 9 funds) and products (Mercer Aspire) that make environmentally sustainable investments within the meaning of SFDR are required, pursuant to SFDR and the Taxonomy regulation to disclose information of those investments as further set out below.

Sustainable funds and products environmentally sustainable investments are considered to contribute to environmental objectives of climate change mitigation and/or climate change adaptation. The “do no significant harm” principle applies only to those investments underlying the financial product that take into account the EU criteria for environmentally sustainable economic activities. The investments underlying the remaining portion of this financial product do not take into account the EU criteria for environmentally sustainable economic activities.

The EU criteria for environmentally sustainable economic activities are set out in the Taxonomy Regulation and the Technical Screening Criteria (“TSC”) that accompany the Taxonomy Regulations. As at the date of this addendum, the TSC are either newly published (i.e. in respect of the first two Taxonomy environmental objectives of climate change mitigation and adaptation) or have not yet been developed (i.e. for the other four Taxonomy environmental objectives). As such, the economic activities funded by the sustainable funds or product investments cannot currently be assessed using the EU criteria for environmentally sustainable economic activities under the Taxonomy regulations. In addition, the SFDR delegated legislative measures which will set down the calculation methodology for the assessment of the level of Taxonomy-compliant activities funded by sustainable investment have not yet been finalised.

In light of the above as at the date of writing, Mercer is not able to accurately or reliably assess how and to what extent the Article 8 or Article 9 funds investments fund economic activities that qualify as sustainable under the Taxonomy regulations. As such the investments underlying the funds cannot at this time be classified as investment in economic activities that qualify as environmentally sustainable economic activities under the Taxonomy Regulation.

Mercer is keeping the situation under active review and where it assessed there is sufficient, reliable, timely and verifiable data to assess the extent the funds investment are Taxonomy compliant activities and the necessary outstanding legislative measures to enable to performance of that assessment are finalised, this disclosure will be updated.

For the purposes of the Taxonomy Regulation, the investments underlying those funds that are not sustainable, do not take into account the EU criteria for environmentally sustainable economic activities.