Mercer | Trump Era Could Signal Increase in Sustainable Investment

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Trump era could signal increase in sustainable investing opportunities

  • Tuesday, 28 February 2017
  • Ireland, Dublin
  • Donald Trump’s election may lead to an increased role for investors in areas such as renewable energy and sustainable natural resources
  • Political uncertainty arising from Brexit, the election of Donald Trump and upcoming European elections is expected to continue to heavily influence markets over 2017
  • Short-term focus on investment risks arising from political uncertainty must be balanced with longer-term challenges, such as the emergence of sustainable investing trends to deal with global warming and resource scarcity

Donald Trump’s election could lead to an increased role for investors in areas such as renewable energy and sustainable natural resources, delegates at the Mercer 2017 Investment Seminar in Dublin were told today.

More than 100 delegates representing Ireland’s largest institutional investors and Irish assets of over €30bn attended the seminar to hear Mercer’s view on the market outlook and key investment strategy trends for 2017.

Delegates heard that greater opportunities in sustainable investing might arise for pension schemes and other institutional investors in 2017 as a result of the election of Donald Trump.

Rob Meaney, Mercer Senior Investment Consultant, commented,

The election of Donald Trump, a known climate-change sceptic, could actually increase the role that pension schemes and other institutional investors can have in the area of sustainable investing. In practice, this means that any reduction in funding from political sources for climate-change projects may represent an opportunity for investors to bridge this gap.”

Global sustainability challenges such as climate change and resource scarcity are of crucial importance and investors are now starting their long-term planning to address the associated risks and opportunities. Areas that have performed well in the past may not necessarily perform as well in the future and institutional investors, including Irish pension scheme trustees, will need to refresh their long-term investment views to adapt to this changing world.

Following Brexit and the election of US President Donald Trump in 2016, delegates heard that more uncertainty can be expected in 2017, with the outcome of the upcoming French elections contested by Marine Le Pen of particular concern for investors.

Paul Kenny, Partner and Head of Investment Strategy for Mercer Ireland, commented,

Despite the strong returns seen from global equity markets over the last number of years, significant risks remain for Irish pension schemes. It is a difficult environment, with investors torn between the potential short-term risks from Donald Trump and the political situation in Europe, on the one hand, and longer-term challenges such as demographic headwinds, disruptive technology, global warming and resource scarcity, on the other.

Investment managers are now expected to have a clear policy on sustainable investing, and pension scheme trustees should ensure they are comfortable with their investment managers’ views and policies in this area. To gain more direct access to companies and assets focused on sustainable investing, investors should consider targeted private equity, renewable energy infrastructure and sustainable natural resources investments where the underlying assets and projects are focused on the move to a more sustainable, lower-carbon economy.

Climate change, in particular, is gaining increased attention from investors globally. As of this year, 194 governments across the world have signed up to the Paris Accord, committing to limit global warming and lower greenhouse gas emissions, with a longer-term target of carbon neutrality by 2050. Delegates heard that this transition to a lower-carbon economy is likely to result in huge structural changes globally that will place significant pressure on certain companies and industry sectors in the years ahead, while presenting opportunities for others.

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Notes to Editors:

Further Mercer resources on the subject of sustainable investment can be found here:

https://www.mercer.ie/our-thinking/investing-in-a-time-of-climate-change.html

https://www.mercer.ie/our-thinking/dispatch-from-cop21-what-the-paris-agreement-means-for-investors.html

Download Mercer’s white papers on the global economic and market outlook and 2017 investment themes here:

https://www.mercer.ie/our-thinking/economic-and-market-outlook-and-beyond.html

https://www.mercer.ie/our-thinking/investment-themes-and-opportunities.html

About Mercer

Mercer is a global consulting leader in talent, health, retirement and investments. Mercer helps clients around the world advance the health, wealth and careers of their most vital asset – their people. Mercer’s more than 20,000 employees are based in 43 countries and the firm operates in over 140 countries. Mercer is a wholly owned subsidiary of Marsh & McLennan Companies (NYSE: MMC), a global professional services firm offering clients advice and solutions in the areas of risk, strategy and people. With annual revenue of $13 billion and 60,000 colleagues worldwide, Marsh & McLennan Companies is also the parent company of Marsh, a leader in insurance broking and risk management; Guy Carpenter, a leader in providing risk and reinsurance intermediary services; and Oliver Wyman, a leader in management consulting. For more information, visit www.mercer.ie. Follow Mercer on Twitter @MercerIreland.

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