Mercer and L&G to target net-zero, Aviva launches equity fund

Mercer to target net-zero absolute carbon emissions by 2050

Consistent with its goal to place sustainability at the centre of its investment approach, Mercer has committed to a target of net-zero absolute carbon emission by 2050. This will apply to UK, European and Asian clients with discretionary portfolios and the majority of its multi-client, multi asset funds domiciled in Ireland. This represented a combined £31.5bn in assets under management as of December 31 2020. To achieve this goal, Mercer plans to reduce portfolio relative carbon emissions by around 45 per cent from 2019 baseline levels by 2030. The company will be working closely with its appointed investment managers to identify and manage a staged emissions-reduction plan, oversee portfolio allocations to climate solutions, and steward an increase in transition capacity across the funds.

L&G master trust to reduce carbon emissions by 50% in 2025

L&G has announced a roadmap to achieve net-zero by 2050 in its master trust default investment option and Legal & General Investment Management defined contribution business. The framework will be available to more than 4m DC scheme members, comprising £53bn of assets under management. It will include targets of around 50 per cent reduction in carbon emissions intensity within its multi-asset funds and 60 per cent for target-date funds, with the growth phase targeting 65 per cent. Furthermore, L&G has established an approach to enable its master trust auto-enrolment default fund to target reduced carbon emissions intensity, including the setting of minimum climate expectations for investee companies. The company expects to achieve this by using a combination of the use of climate transition/aligned benchmark indices in some index-tracking funds, selective divestment where appropriate and a focus on reshaping exposures within priority sectors. In order to reduce emissions, the relevant investment strategies will also seek to increase their exposure to climate solutions, such as sustainable forestry and renewable energy. 

Aviva launches climate transition equity fund

Aviva has launched a new climate transition global equity fund, which will invest in shares of companies globally that are responding to climate change. Businesses that have their workplace pension scheme with Aviva will be able to give their employees the choice to invest in the fund starting on Wednesday. Their aim is to target companies offering goods and services providing solutions for climate change mitigation and adaptation, as well as investing in those companies that are orientating their business models to be resilient in a lower-carbon, warmer world. The fund will not be investing in companies that are exposed to thermal coal, unconventional fossil fuels, or thermal coal electricity generation, and limits exposure to those producing oil and gas or gas-fired power generation. In 2019, Aviva launched a Stewardship lifestyle strategy — a workplace pension default investment strategy that incorporates ethical and ESG considerations.