Mercer is a leading thinker on integrating climate considerations within modern investment practice. For the first time nearly every country in the world has committed to lowering greenhouse gas emissions to a level that should keep a global temperature rise well below 2°C this century. This increases ‘climate transition’ risk and creates opportunities for investors associated with developments in climate policy and technology. These are two of the four climate risk factors included in Mercer’s TRIP climate risk framework.
The 21st UN Climate Change ‘Conference of the Parties’ (COP21), held in Paris, concluded on 12 December with a landmark agreement. For the first time, countries commit to lower their greenhouse gas emissions sufficiently to keep a global temperature rise well below 2°C this century, relative to pre-industrial levels.
Given that we have already reached 1°C of warming, this outcome raises the level of near-term ‘climate transition1’ risk for investors – based on the strength of climate change policy that is now needed. However, this is balanced by the opportunity for investment in low-carbon technologies and infrastructure, which are likely to grow significantly.
Mercer is actively involved in discussions on integrating climate considerations within investment practices. We participated in COP21 events in order to promote our thoughts on best-practice for investors in a time of climate change.
To help clients understand the relevance of the COP21 agreement, this Dispatch:
- Summarises key elements of the Paris Agreement
- Sets forth how investors can measure and manage climate risk and pursue related opportunity
- Communicates Mercer’s commitment, including to the Paris Pledge