H E A L T H W E A L T H C A R E E R
J A N E A M B A C H T S H E E R
G L O B A L C H A I R O F R E S P O N S I B L E I N V E S T M E N T
T C F D R E C O M M E N D AT I O N S : W H AT,
W H Y A N D F O R W H O M –
I M P L I C AT I O N S T O I N S T I T U T I O N A L
I N V E S T O R S
1 6 J A N U A R Y 2 0 1 8

2Copyright © 2018 Mercer Limited. All rights reserved.
A L I T T L E B I T A B O U T …
M E R C E R ’ S G L O B A L I N V E S T M E N T S B U S I N E S S
*Assets under advisement includes aggregated data for Mercer Investment Consulting, Inc. and its affiliated companies globally (“Mercer”). Data is 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 data. Where available, data is provided as of 30 June 2017 (“Reporting Date”). If data was
not available as of the Reporting Date, information from a date closest in time to the Reporting Date, which may be of a more recent date than the Reporting Date, was included. Data includes assets of clients that have
engaged Mercer to provide project-based services within the 12-month period ending on the Reporting Date, and assets of clients that subscribe to Mercer’s Manager Research database.
$10.2 TRILLION
UNDER ADVICE
• Investment strategy
• Asset allocation
• Portfolio construction
• Manager selection
• Responsible investment
• Transitions, custody, FX
A D V I C E
$190 BILLION
UNDER
MANAGEMENT
• Implemented Consulting
• Single Sector Multi-Manager
• Diversified Portfolios
• Transition Solutions
S O L U T I O N S
6,000+ MANAGERS
COVERED
• Global Investment Manager
Database
• MercerInsight Platform
• Global Research
‘Boutiques’
T O O L S & R E S E A R C H
T E A M O F > 2 , 2 0 0  2 0 C O U N T R I E S  5 9 C I T I E S  4 0 + Y E A R S ’ E X P E R I E N C E

3Copyright © 2018 Mercer Limited. All rights reserved.
M E R C E R ’ S L O N G S T A N D I N G C O M M I T M E N T T O
S U S TA I N A B I L I T Y
2004 - 2009
Responsible Investment
team formed and initial
years on PRI development
and ESG evidence and
education
2010-11
ESG Ratings by strategy
implemented and climate
change and SAA report
published
2013
Sustainable
Opportunities
vehicle launched
2014
Sustainable Growth
framework launched
2014
Sustainability key
component of
Mercer’s global
equity beliefs /
advice
2015
Mercer’s major
Investing in a Time of
Climate Change report
is published
2017
Mercer represented on
FSB Climate
Disclosure Task Force*
2017
Mercer
launches
Sustainable
Global Equity
Fund
*See: www.fsb-tcfd.org
2015
Sustainable
Investment
Policy - Europe
Delegated
Solutions

4Copyright © 2018 Mercer Limited. All rights reserved.
T H E G R E AT A C C E L E R AT I O N
U N D E R S TA N D I N G H O W T H E W O R L D I S C H A N G I N G
S O C I O - E C O N O M I C T R E N D S ( 1 7 5 0 –
2 0 1 0 )
E A R T H S Y S T E M T R E N D S ( 1 7 5 0 – 2 0 1 0 )
Source: Steffen et al (2015)
I N D U S T R I A L I S A T I O N – F O S S I L F U E L E N E R G Y - P O P U L A T I O N G R O W T H –
P O S T 1 9 5 0 C O N S U M P T I O N – D E F O R E S T A T I O N – C O N S T R U C T I O N – A G R I C U L T U R E

5Copyright © 2018 Mercer Limited. All rights reserved.
PA R I S A G R E E M E N T
N AT I O N A L P O L I C Y A N D L E G A L D E V E L O P M E N T S
#ExxonKnew
Climate Change
• Laws (164 countries)
• Litigation (25 countries)
• 1,200 relevant laws globally

6Copyright © 2018 Mercer Limited. All rights reserved.
C L I M AT E - R E L AT E D D I S C L O S U R E S
R E G U L AT O R S A R E TA K I N G A C T I O N
S O U R C E : T C F D
• In 2015, the Financial
Stability Board established
the Task Force on Climate-
Related Financial
Disclosures (TCFD).

7Copyright © 2018 Mercer Limited. All rights reserved.
C L I M AT E - R E L AT E D D I S C L O S U R E
F I N A N C I A L S Y S T E M R I S K R E D U C T I O N
S O U R C E : T C F D
Transition
Physical
Policy and Legal
Technology
Market
Reputation
Acute
Chronic
Risks Opportunities
Resource Efficiency
Energy Source
Products/Services
Markets
Resilience
Financial Impact
Assets
Liabilities
Capital
Balance SheetIncome
Statement
Revenues
Expenditures

8Copyright © 2018 Mercer Limited. All rights reserved.
• The recommendations apply to asset owners, asset managers, and
companies, and address:
– Governance: Who has oversight of climate-related risks and disclosures
(board/management)?
– Strategy: Have you considered climate-related risks and opportunities for
investment strategy? Have you considered impacts of climate
scenarios?
– Risk Management: Have you established risk assessment and reduction
processes, including engagement and low-carbon allocations?
– Metrics & Targets: Have you undertaken carbon footprinting and
considered targets for improvements?
C L I M AT E - R E L AT E D D I S C L O S U R E S
W H AT T H E Y M E A N F O R Y O U
For PRI signatories, TCFD disclosure will be included in the 2018
reporting and assessment framework.

9Copyright © 2018 Mercer Limited. All rights reserved.
T I M E L I N E C H A L L E N G E
F O R I N V E S T O R S
N E W A C T I O N !
M O N I T O R C L I M A T E
R I S K F A C T O R S
M O D E L L I N G
P E R I O D F O R
T H I S A N A L Y S I S :
T O 2 0 5 0
M O S T S I G N I F I C A N T
C L I M A T E C H A N G E
I M P A C T S :
B E Y O N D 2 0 5 0
T H E I N V E S TO R Z O N E
Q U A R T E R L Y
R E V I E W S :
3 M O N T H S
A N N U A L
R E V I E W S :
1 Y E A R
S T R A T E G I C
R E V I E W S :
3 – 1 0 Y E A R S
T H E C L I M AT E Z O N E

10Copyright © 2018 Mercer Limited. All rights reserved.
H O L I S T I C C L I M AT E R I S K M A N A G E M E N T
P O R T F O L I O R I S K A S S E S S M E N T M E T H O D S
TOP - D OW N
• Asset-Liability Modeling
• Manager Monitoring / Selection Process
BOTTOM - U P
• Company, Sector, and Geographic Analysis
• Direct investment process
I N V E S T M E N T R I S K M A N A G E M E N T S T R AT E G Y

11Copyright © 2018 Mercer Limited. All rights reserved.
Potential financial impacts mean considering climate change is increasingly expected
under fiduciary duty obligations
C L I M AT E C H A N G E A S A N I N V E S T M E N T I S S U E
F R O M S C E N A R I O S T O I N V E S T M E N T I M P A C T S
Physical damages
• Impacts of sea level rise, storms, wildfires
• Resource availability of water and food
Low-carbon energy
transition
• Policy changes to influence that transition
• Technology to enable that transition
S I G N I F I C A N T I N C R E A S E S I N G H G E M I S S I O N S A R E R A I S I N G AV E R A G E
T E M P E R AT U R E S A N D C H A N G I N G T H E E A R T H ’ S C L I M AT E
1°C 2°C 3°C 4°C
Today - already
driving some
physical damages
Not seen for 3
million years, with
highly disruptive
damages expected
Not seen for tens
of millions of years,
with severe
damages expected
‘Safe’ range for
humans, but with
meaningful
damages expected
Increaseby2100

12Copyright © 2018 Mercer Limited. All rights reserved.
A S S E S S I N G C L I M AT E R I S K
I N V E S T O R I M P L I C AT I O N S – 2 ° C S C E N A R I O
W H AT I S T H E I N V E S T M E N T R I S K F R O M C L I M AT E C H A N G E ?
• 2ºC scenario has greatest near-term (i.e. 10 year) impacts
• Asset classes and sectors matter – review “at risk” sectors
• Consider increasing exposure to sustainability-themed investments
Source: Mercer (2015)
1 0 Y E A R M E D I A N A N N U A L R E T U R N I M P A C T S –
A S S E T C L A S S E S
1 0 Y E A R M E D I A N A N N U A L R E T U R N I M P A C T S –
S E C T O R S

13Copyright © 2018 Mercer Limited. All rights reserved.
I N S T I T U T I O N A L I N V E S T O R S
M O V I N G A H E A D O N M A N A G I N G C L I M AT E R I S K
E S TA B L I S H E N H A N C E E V O LV E
B E L I E F S P R O C E S S E S P O R T F O L I O
P O L I C Y
1. Assess risk exposure
- Total portfolio
- Asset class
- Industry sectors
2. Engage to reduce risk
- Managers and
companies
- Policymakers
3. Invest
- Sustainability / low-
carbon allocations
- High ESG ratings
- Potential divestment

14Copyright © 2018 Mercer Limited. All rights reserved.
I M P O R TA N T N O T I C E S
References to Mercer shall be construed to include all associated companies.
© 2018 Mercer. All rights reserved.
This contains confidential and proprietary information of Mercer and is intended for the exclusive use of the parties to whom it was provided
by Mercer. Its content may not be modified, sold or otherwise provided, in whole or in part, to any other person or entity, without Mercer’s
prior written permission.
The findings, ratings and/or opinions expressed herein are the intellectual property of Mercer and are subject to change without notice. They
are not intended to convey any guarantees as to the future performance of the investment products, asset classes or capital markets
discussed. Past performance does not guarantee future results. Mercer’s ratings do not constitute individualised investment advice.
Information contained herein has been obtained from a range of third party sources. While the information is believed to be reliable, Mercer
has not sought to verify it independently. As such, Mercer makes no representations or warranties as to the accuracy of the information
presented and takes no responsibility or liability (including for indirect, consequential or incidental damages), for any error, omission or
inaccuracy in the data supplied by any third party.
This does not constitute an offer or a solicitation of an offer to buy or sell securities, commodities and/or any other financial instruments or
products or constitute a solicitation on behalf of any of the investment managers, their affiliates, products or strategies that Mercer may
evaluate or recommend.
For the most recent approved ratings of an investment strategy, and a fuller explanation of their meanings, contact your Mercer
representative.
For Mercer’s conflict of interest disclosures, contact your Mercer representative or see www.mercer.com/conflictsofinterest.
Mercer’s universes are intended to provide collective samples of strategies that best allow for robust peer group comparisons over a chosen
timeframe. Mercer does not assert that the peer groups are wholly representative of and applicable to all strategies available to investors.

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