In an effort to limit global warming to 1.5 degrees Celsius, the two firms set targets to reduce the carbon intensity associated with tens of billions of dollars in assets by 40% to 65% by 2030.
LGIM said it will reduce carbon emissions associated with £53 billion ($73.4 billion) in defined contribution portfolios.
The firm intends to reduce carbon-linked investments by 40% to 55% for some of its multiasset funds and 45% to 65% for its target-date funds by 2030.
LGIM also set an intermediate target of 2025, by which point it aims to have reduced the carbon intensity of the multiasset funds by 20% to 30% and target-date funds by 30% to 50%.
Reductions are expected to be achieved by using a combination of transition-aligned benchmarks, selective divestments and tweaking exposures within some sectors, according to the LGIM news release.
"Climate change is the defining challenge of our generation and an area of great concern to many of our members," said Emma Douglas, head of defined contribution at LGIM, in the release. "As the innovations and change required to deliver net-zero materialize, we will continue to evolve our road map for the coming years and use our proprietary framework to monitor the progress. Our road map to net-zero is a significant step in assuring our members that their retirement savings are influencing real change."
Separately, Mercer said it will limit the carbon emissions in $43.7 billion of investments in portfolios by 45% by 2030.
The investments are made on behalf of U.K., European and Asian clients, whose assets are managed by Mercer through discretionary, multiclient and multiasset portfolios.
"We are committing to investing for a 1.5-degree scenario because robust analysis tells us it is in the best financial interests of our members and clients," said Niall O'Sullivan, CIO of Europe, the Middle East and Africa, and Asia, in Mercer's news release. "Another contributing factor is the increasing demand for a rigorous and measurable approach to climate-change investment that we see from pension scheme members as well as clients."