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Mercer (Service Provider)

Service Providers Framework 2020

You are in Strategy and Governance » Policy on ESG beliefs

Policy on ESG beliefs

SG 01. Responsible investment policy

01.1. Describe how your organisation’s philosophy incorporates environmental, social and governance factors, and the link to your business offerings.

Mercer's ‘Pathway to Responsible Investing’ outlines how we work with our clients in each stage of the investment process, from beliefs and policy, to processes and portfolio.  Additional information can be found at:

The RI Pathway is an update to the previous ‘Investment Framework for Sustainable Growth,’ details of which can be found at: 


01.2. Indicate whether you have policies that formalise the incorporation of your ESG beliefs in your business offerings.

01.3. Indicate the components/types of your internal policy and provide the URL and/or an attachment of the document/s if they are publicly available.

Policy components/types

Public availability

          Mercer's Global Investment Beliefs

Public availability

01.4. Indicate how these are put into practice internally across the organisation.

          Mercer's Investment Beliefs are made public and regularly used in presentations with clients.

01.5. Additional information [OPTIONAL]

Mercer's Global Investment Beliefs underpin our approach to setting investment strategy with our clients. In our view investment beliefs are the starting point for setting effective investment strategy, providing the guiding principles for robust investment decision making.

Mercer's investment beliefs are articulated within the following six categories, which includes ESG considerations ("sustainability"):

  • Client Objectives
  • Risk Management
  • Active Management
  • Operational Efficiency
  • Dynamic Asset Allocation
  • Sustainability

Full details of our investment beliefs can be found here:

SG 02. Norms used to develop policies

02.1. Indicate what frameworks and guidelines you have used to develop your organisation’s policies. Tick all that apply.

02.2. Additional information. [OPTIONAL]

SG 03. Policy offerings to clients

03.1. Indicate whether you offer standard, off the shelf, policies to clients as part of your product offerings, and/or whether you create tailored versions for individual clients.

Off the shelf
Asset class-specific RI guidelines
Sector-specific RI guidelines
Screening/exclusions policy
Engagement policy
(Proxy) voting policy
RI guidelines set out within the Investment Policy Statement (IPS)
RI guidelines set out in a freestanding RI policy
Multi-year RI implementation project plan
Conflict of interest management policy
Stockbroker allocation policy
Securities lending policy
Other, please specify (1)
Other, please specify (2)
Other, please specify (3)
None of the above

03.2. Provide a brief description of the key elements, any variations, or exceptions applying to these policies.

Across Mercer investment consulting services, the majority of our client policy work will draw on our core documents. In addition, where more detailed, tailored policy work is developed for clients, this is typically undertaken by Mercer's Responsible Investment team and varies by region and client type.

03.3. Additional information. [OPTIONAL]

SG 04. ESG/RI in business offerings

04.1. Briefly describe how you include ESG/RI factors as part of your business offerings.

Business area

Investment Consultancy

How you include ESG/RI factors

Mercer's Pathway to Responsible Investing follows a Beliefs, Policy, Process and Portfolio approach that seeks to integrate ESG considerations at every stage of the investment process. This includes:

  • Investment Beliefs workshops and Policy development advice on ESG and climate change, sometimes on a stand-alone basis, but often alongside broader investment beliefs and policy reviews.
  • Process advice e.g. applying Mercer's ESG Ratings, which rates how investment strategies integrate ESG throughout their investment process, to creating a portfolio monitoring framework, benchmark reports and advice on collaborative engagement with industry associations.
  • Portfolio advice e.g. total portfolio climate change risk assessments on a scenario basis, integrating sustainability themed opportunities or low-carbon optimised exposures by asset class; and advice on voting and engagement reporting.

Further information on this process is available on our website, here: and here:


04.2. Indicate the roles in your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for ESG/RI within the organisation.

Roles present in your organisation
Oversight/accountability for ESG/RI
Implementation of ESG/RI
Chief Executive Officer (CEO), Chief Financial Officer (CFO)
Chief Operating Officer (COO), Chief Information Officer (CIO)
Other chief-level staff

Please specify

          President, Wealth - Rich Nuzum
Other heads of department

Please specify

          Global Head of Research - Deb Clarke
Dedicated ESG/RI staff
Other role, specify (1)
Other role, specify (2)
Other role, specify (3)
None of the above

04.3. Indicate how you ensure ESG/RI expertise for the roles where there are RI oversight/accountability or implementation responsibilities.

04.4. Indicate whether your organisation has any ESG/RI linked incentives for its employees.

04.5. Describe the ESG/RI linked incentives.

The Responsible Investment team ratings and any bonus eligibility each year relate directly to the RI business plan and goals. The broader Mercer consulting team also have objectives to think more widely across Mercer's services and raise the ones deemed appropriate for each client, with Responsible Investment a specific offering that is tracked. Incentives for the broader Mercer team are, however, less directly related to specific RI goals than the primary RI team.

04.7. Additional information [OPTIONAL]

SG 05. Outsourcing of services

05.1. Indicate whether you outsource some of your services. Report percentage of services outsourced as percentage for that specific business area.

Business area

SG 06. Providing training/education

06.1. Indicate whether you provide training/educational services on ESG/RI. Tick all that apply.

          Mercer's RI team provides training to client investment and operational staff, in addition to trustees/board members, and for our colleagues and policymakers.

06.2. Describe the main components of your training/educational services on ESG/RI and any variations depending on the group you provide training/education to.

At Mercer we aim to incorporate training within existing investment committee agenda meetings, together with bespoke workshops where additional time is allocated on specific topics for Boards or Investment teams. The typical training/education session introduces the concepts and definitions, with a key focus on the current drivers that are underpinning new developments, followed by a focus on how our clients can respond to these drivers, with next steps identified. Bespoke training can include focus areas on ESG and climate change investment beliefs, sensitive investment topics and screening, or impact investing objectives.

06.3. Describe whether these training/educational services include any commercial elements.

          The commercial elements of our training/education will vary depending on the client relationship, the time commitment and the bespoke nature of the session.

06.4. Additional information. [OPTIONAL]

SG 07. Applying, advancing and promoting the PRI principles

07.1. Describe how your organisation applies, advances and promotes the PRI Principles.

Mercer's RI team supports its clients, globally, on a wide range of ESG/RI implementation activities which directly support the objectives of the PRI. We have listed some examples by principle below:

Principle 1:

  • Developing ESG/RI beliefs, policies and strategies
  • Assessing managers on the extent to which they incorporate ESG factors in their decision making; reflected through an ESG rating
  • Incorporating ESG/RI considerations into manager selection and monitoring
  • Assessing the materiality of different ESG issues and understanding exposure to these issues within investment portfolios e.g. climate change risk factors under different scenarios
  • Developing the means to reduce exposure to specific ESG issues / risks (e.g. "portfolio decarbonisation")
  • Allocating assets to ESG/RI and sustainable investment themes

Principle 2:

  • Establishing active ownership practices and/or requiring appointed managers to do the same, which includes policy development and regular monitoring reporting against the UK Stewardship Code or regular benchmark reports for stewardship/active ownership, assessing voting and engagement activity and opportunities for collaboration.

Principle 3:

  • The disclosure required of managers as part of Mercer's ESG Ratings process is key, together with more specific reporting on active ownership, on climate change policies and activities, or in follow up dialogue on carbon footprinting or exclusions screening results.
  • Active supporter of the FSB TCFD.

Principle 4:

  • In addition to being an active signatory of the PRI, Mercer also regularly works with clients during the early stages of their decision process (i.e. prior to them becoming a signatory) - for example, to highlight the benefits of joining the initiative and what PRI signatory status implies.

Principle 5:

  • Mercer continues to work collaboratively with many industry stakeholders to enhance the implementation of the principles. An example is the 2015 Investing in a Time of Climate Change report, which was a global collaboration of asset owners, managers and advisory group members, with much of the work made public and accessible. A follow-up to this report was released in April 2019 which expands on the research.  We continue to convene the Future Makers Working Group. We have also collaborated on research papers with various entities, including the Inter-American Development Bank, the Center for International Environmental Law, and the 2 degrees Investing Initiative. We have hosted multiple roundtables, for example, on sustainable infrastructure, and participated in a significant number of formal and informal collaborative initiatives. Our work on the TCFD is one recent example of the significant contribution Mercer makes outside our direct client work.
  • Other areas where RI team members have specifically been involved in collaborative initiatives include:

    • Mercer supporting the Australian Sustainable Finance Initiative both with advice and office space (latest Key themes report in 2019 can be found at:;

    • Contributing to the RIAA human rights working group; and

    • Participation in three working groups on the IIGCC Paris Alignment initiative.

Principle 6:

  • We regularly publish articles, research and thought pieces on ESG topics.
  • Providing high quality, regular reporting to the PRI via the annual PRI Reporting Framework.

07.2. Highlight whether there are any ways that your organisation would like to engage further with the PRI. [OPTIONAL]

SG 08. Actions taken to promote responsible investment

08.1. Indicate which of the following actions your organisation has taken to promote responsible investments during the reporting year, independently of collaborative initiatives.

          Provided in-kind support for academic and industry research in our review time, meetings, presentations and hosting events.

08.2. Additional information. [OPTIONAL]

SG 09. Long term trends

09.1. Indicate which of the following long-term trends are addressed in your product outputs.

09.2. Explain how this long-term trend affects your product outputs.

Changing demographics - in particular increasing longevity of pension scheme members - has a direct impact on the advice and support that Mercer provides to many of its clients (i.e. those with liabilities linked to longevity, such as pension schemes).

From an ESG perspective, all of the long-term trends listed here have a significant impact on the demand drivers for sustainability-themed investments - i.e. demographics, energy and resource demand/use and technology - as they are all linked to climate change in particular, but also broader ESG trends and investment themes, which include education, health, waste, water etc.

Mercer's ongoing intellectual capital work - from within the RI team and more broadly across the firm (particularly the MMC Insights Center) - explores all of these issues and is reflected in our investment advice, manager research (on the investment strategies available to clients), issue specific research (e.g. our climate change reports) and in how we monitor client portfolios.

Summaries of our work in this area can be found on the following webpages of

  • Mercer's investment themes and opportunities 2018, 2019 and 2020: (2018), (2019) and (2020)
  • RI materials:
  • Broader Perspective on Risk paper and video:

09.2. Explain how this long-term trend affects your product outputs.

See above comment, and in particular Mercer's Investing in a Time of Climate Change (2015) report, and Investing in a Time of Climate Change: The Sequel (2019) report.

This has added a new dimension to the services we provide clients throughout our advice on Beliefs, Policy, Process and Portfolio. The most significant addition is the climate change scenario modelling in strategic asset allocation advice, and the subsequent portfolio advice on further risk assessment, risk reduction and identifying new opportunities by asset class.

09.2. Explain how this long-term trend affects your product outputs.

See comments in above two sections, and we note a particular increased focus on water, too little and too much, which connects into the climate change study work. This has been a topic at two of Mercer's Global Investment Forums in 2016/2017 and this connected to a social migration presentation for the 2018 Forums, and is expected to increasingly feature in our research and advice.

Karen Lockridge, based in Canada, has also been a member of the Advisory Group for a Drought Stress Testing Tool project. The pilot project on Environmental Stress Testing, led by the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) GmbH and the Natural Capital Finance Alliance (NCFA), has developed an analytical framework and tool that allows banks to quantify and assess the potential impact of drought events on the performance of their corporate loan portfolio. The project has been funded by Germany’s Federal Ministry for Economic Cooperation and Development (BMZ).

09.2. Explain how this long-term trend affects your product outputs.

See comments in above sections, and in particular Mercer's Investing in a Time of Climate Change Study reports and Broader Perspective on Risk paper. We believe technology presents an underestimated disrupter and opportunity in a number of sectors and asset classes

SG 10. Interaction with asset owners

10.1. Indicate whether you interact with asset owner clients.

10.2. Indicate the typical frequency and type of interactions with your asset owner clients.

Type of interaction






10.3. Additional information. [OPTIONAL]

SG 11. Aligning approach with investor goals

11.1. Describe how you typically align your organisation’s philosophy and approach to ESG/RI with your investor clients’ goals.

Mercer's Global Investment Beliefs begin with client objectives at the centre of all we do. Our approach to ESG/RI is also guided by our Pathway to Responsible Investment, which follows the investment process from Beliefs to Policy, Process and Portfolio decisions - where investor goals are also the key focus in setting their beliefs and policy. Mercer's philosophy and approach to ESG/RI is all about integration - that this should be one consideration, alongside others, in each stage of the investment decision making process. We are confident investor goals are compatible with this philosophy and approach when a good governance process is adopted.

11.2. Additional information. [OPTIONAL]

SG 12. ESG recommendations not aligned with investor goals

12.1. Describe what steps you take, if any, when your ESG recommendations are not in line with your investor clients’ goals.

12.2. Additional information. [OPTIONAL]

Mercer does not provide ESG advice / recommendations that are not in line with investor goals.

SG 13. Seeking feedback from clients

13.1. Indicate whether you seek feedback from clients on your RI/ESG services and product offerings

13.2. Describe how you use this feedback in your RI/ESG services and product offerings.

Mercer uses feedback to improve our services to clients and refine or develop new product offerings.

SG 14. Managing conflicts of interest

14.1. Indicate whether your organisation has a policy for managing potential conflicts of interest.

14.2. Describe how you manage potential conflicts of interest.

Mercer's operational guidelines and expectations are set out in our group wide code of conduct - The Greater Good. This can be found at:

14.3. Describe how you ensure that company employees do not derive any personal gain from the use of information collected during your work process.

Mercer's operational guidelines and expectations are set out in our group wide code of conduct - The Greater Good. This can be found at:

14.4. Additional information. [OPTIONAL]