Impact investments seek to make sustaining positive change. Institutional investors in this asset class are typically focused on improving environmental, social, and economic outcomes.
Historically, impact investments have tended to focus on climate issues and while climate goals remain integral to many investor allocations, the opportunity set is broadening to focus on social and governance issues. This expanded approach opens up a tremendous number of opportunities for investors looking to make a difference with their capital.
We believe a sustainable investment approach is more likely to create and preserve long-term investment capital. Environmental, Social and Corporate Governance (ESG) factors can have a material impact on long-term risk and return outcomes and should be integrated into the investment process. Taking a broader and longer-term perspective on risk, including identifying sustainability themes and trends, is likely to lead to improved risk management and new investment opportunities.
Climate change poses a systemic risk, and investors should consider the potential financial impacts of both the associated transition to a low-carbon economy and the physical impacts of different climate outcomes. Governance helps the realization of long-term shareholder value by providing investors with an opportunity to enhance the value of companies and markets.
There will be an estimated $5 trillion of low-carbon business opportunities by 2030 and a projected $26 trillion gain in GDP as a result of a low-carbon growth model1
2 billion people currently live without basic sanitation, and 100 million risk falling back into poverty by 2030 if climate change goals are not realized2
Food production is estimated to rise by 70% by 2050, and a 40% freshwater supply/gap is expected by 20303
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1 Source: Business and Sustainable Development Commission (2017) & New Climate Economy (2018).
2 Source: World Health Organization and Business and Sustainable Development Commission (2017).
3 Source: Sources: Food and Agricultural Organization and World Bank Group.
About Mercer’s assets under management and advisement figures
The assets under advisement data (AUA Data) reported here include aggregated assets under advisement for Mercer Investments L LC and their affiliated companies globally (Mercer). The AUA Data have been derived from a variety of sources, including, but not limited to, third-party custodians or investment managers, regulatory filings, and client self-reported data. Mercer has not independently verified the AUA Data. Where available, the AUA Data are provided as of the date indicated (the Reporting Date). To the extent information was not available as of the Reporting Date; information from a date closest in time to the Reporting Date, which may be of a date more or less recent in time than the Reporting Date, was included in the AUA Data. The AUA Data include assets of clients that have engaged Mercer to provide ongoing advice, clients that have engaged Mercer to provide project-based services at any time within the 12-month period ending on the Reporting Date, as well as assets of clients that subscribe to Mercer’s Manager Research database delivered through the MercerInsight® platform as of the Reporting Date.
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