Asia continues to lag other regions for integrating ESG principles with investing; better data and stronger regulatory requirements will help institutional investors, market observers say.
A portfolio's carbon footprint is a measure of the impact that a company has on the environment in terms of the amount of greenhouse gas emissions produced. This new client offering comes as more institutional investors have expressed an interest in assessing and better managing the risks and opportunities associated with the impact of their investments on the environment and climate change.
"Investors are increasingly conscious about the impact of their investments on the environment and are actively looking for guidance on how to 'green' their portfolios,ö says Helga Birgden, Mercer's head of responsible investing for Asia-Pacific. ôThis new tool will allow us to help clients understand the carbon exposure of their equity investments, and provide an indication and analysis of their subsequent carbon footprint.ö
Mercer will develop carbon footprint analysis through the use of a Style Research Portfolio Analyzer (SRPA) tool that can now integrate relevant information from Trucost, an environmental data provider. This makes Mercer the first global consultancy to provide carbon footprint analysis to its clients.
Trucost provides data and analysis on company emissions and natural resource usage in financial as well as quantity terms to help investors, fund managers and analysts understand how environmental issues could affect companies' future earnings.
Institutional investors use the information to assess the carbon or environmental footprints of their portfolios, to identify differences in performance, to address environmental risks and create structured products with lower carbon or environmental impacts.
Trucost tracks data on the environmental impacts and disclosures of over 4,500 companies and has the world's largest record of greenhouse gas emissions. Coverage includes the FTSE All-Share, S&P 500, Russell 1000, Nikkei 225, DJ STOXX 600, MSCI World Developed, MSCI Europe, MSCI Asia ex-Japan and ASX 200 indices.
Mercer's investment consulting business launched the global business unit focused on responsible investment and environmental, social and governance issues in 2004.
While this unit consults directly to some leading responsible investors, the majority of work is done in conjunction with Mercer's investment consulting business which provides investment advice to clients.
Headquartered in Toronto, the 14-person responsible investment team also has staff in New York, London, Tokyo and Melbourne.
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