Financing the transition Benchmarking climate investments The net-zero transition requires new insurance and investment solutions. Using the investment practices of Investors, banks and insurers need to consider how and what emissions to advanced global investors, Mercer measure, how to decarbonize their portfolios, and how to support their clients’ developed a climate-investing decarbonization journeys. benchmarking tool and framework that provides practical climate investing Partnering with the Glasgow Financial Alliance for Net Zero (GFANZ) protocols. The self-assessment tool The Glasgow Financial Alliance for Net Zero (GFANZ) is the world’s largest evaluates 10 categories of activity coalition of financial institutions with a goal of raising climate ambition across and assesses the current level of the financial sector and driving systemic change for the transition to a global progress on a scale of one to five, with net-zero greenhouse gas emissions economy. Oliver Wyman served as the one indicating ‘not started’ and five knowledge partner to the GFANZ secretariat, whose 550-plus members globally indicating ‘fully developed’. represent some of the leading banks, insurers, asset owners and managers, The roadmap allows investors to investment consultants, and financial services providers, globally. improve risk-adjusted returns by GFANZ’s 2022 program focused on operationalizing its members’ net-zero factoring climate change impacts into commitments. Recognizing the wide range of institutions represented in its their organizations and portfolios. membership, GFANZ-wide efforts seek to drive coherence, comparability and Using aggregated results, Mercer transparency across the implementation of members’ net-zero commitments also identified the top four current via pan-sector guidance and frameworks. The end goal is intended to translate challenges as well as solutions, member targets into meaningful action and real-economy impact, aligned with drawing upon the advanced practices net-zero pathways. of global asset owners. GFANZ, supported by Oliver Wyman, published five major reports which help Evaluating responsible investments financial institutions translate their net-zero pledges into actionable, near-term and science-based transition plans. At the heart of these publications is a ten- Mercer’s Responsible Investment Total Evaluation (RITE) tool is an easy to point recommendation framework for financial institutions, setting out guidance follow three-stage process for helping our clients integrate ESG considerations on building out, governing and measuring net-zero transition plans. into their investment decision making. Highlights of improvements for our our UK Investment clients over the last 12 months include: “ Leading with how you will contribute to the • RITE has grown: RITE 2.0 has over 1,000 individual schemes, $400bn+ transition, rather than focusing only on emissions in assets and impacts over 5 million pension scheme members. We believe outcomes, is essential for orchestrating the big this is the largest ESG dataset in the industry and a key differentiator shifts required and directing the actions needed.” amongst competitors. • Our clients have improved their integration of ESG considerations: over Simon Glynn the past 12 months, many schemes have carried out the RITE interventions to Partner, Climate and Sustainability Co-Lead, Oliver Wyman improve their RITE score, with the average score increasing from C+ to B. Overview Environment Social Governance Appendix 2022 ESG REPORT 21