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Manulife Investment Management (MIM) and its parent company, Manulife are fully committed to taking positive action on sustainability issues. At Manulife, these cover a range of objectives including climate change, diversity, equity and inclusion, customer centricity and shareholder value, and health and wellness. With our proud history as a trusted insurer, long-term investor, and good corporate citizen, we want to make decisions easier and lives better for customers, work with external and internal parties to benefit all stakeholders and have a positive environmental and social impact.

Read about Manulife’s approach to embrace and achieve its sustainability goals here.

Our commitment to sustainability extends across the organization

At MIM, we are fully aligned with our parent company’s commitment to advance sustainable investing globally. We believe sustainable investing improves risk-adjusted returns and goes beyond financial performance to help create long-term value for our stakeholders and communities. 

Why we strive to deliver sustainable outcomes 

From an investor perspective, sustainability issues can significantly impact investment returns over the medium and longer term. Therefore, we believe that companies with strong environmental, social, and governance characteristics represent better investment opportunities. These firms tend to be more resource-efficient, possess a lower ESG risk profile and have processes and products that can adapt to changes in regulations. We take full advantage of our public and private markets capabilities, combining our global sustainability and investment teams with local insights to deliver sustainable outcomes.

How we can help with understanding ESG

What is sustainable investing? Who should consider adopting a sustainable investing approach? At MIM, we provide wide-ranging research resources to support your understanding of ESG investing. Read more related articles below:

Navigating ESG integration in China A-Shares investing

ESG investing in Asia – an invisible evolution

Evolving the ESG conversation

 

When building investment portfolios, we take a holistic approach to cover both ESG-related risks and opportunities; this involves the following key components:

Across all asset classes, we continue to integrate ESG analysis into our investment and operating activitiesa. Our integration strategy involves identifying and assessing sustainability factors and engaging with the companies we invest in to gather information, reduce or remove ESG-related challenges and enhance risk-adjusted returns.

Our approach to ESG integration aims to increase returns and reduce risks, and has resulted in industry recognition 


For illustrative purposes only 

We received an A+ from UN PRI for our ESG strategy, governance, and integration with listed equity and fixed income SSA (sovereign, supranational, and agency debt)b.

Manulife was named to the PRI Leaders’ Group 2020 for excellence in climate reportingc.

Highly commended by Savvy Investor Awardd for The Best White Papers of 2020: ESG investing in Asia—an invisible evolution.

a We look to incorporate material ESG considerations throughout the stages of our investment and asset ownership lifecycles, taking into account the characteristics of the asset class and investment process in question, as well as industry and geography, among other factors. Each investment team operates in different markets and with different nuances to its approach to investing. Accordingly, each team integrates ESG factors into its investment process in a manner that best aligns with its investment approach.
b PRI has notified respondents that the 2021 assessment report will be delayed. Please visit the PRI website to learn more about the assessment methodology or to see our transparency report. Our latest PRI scores assessment can be found here.
c Please visit the PRI website to learn more about the methodology for PRI Leaders. As of September 18, 2020. Most recent PRI Leaders’ Group. PRI has announced that the 2021 PRI Leaders’ Group on Stewardship has been postponed.
d www.savvyinvestor.net/awards-2020

As active owners, we work closely and engage with management teams, collaborate with other stakeholders and/or exercise our shareholder voting rights to help these businesses and our operations progress toward their sustainability goals. This involves establishing a framework of policies, training, and governance to promote sustainability, address risks in investment practices, and ensure that all clients’ interests are prioritized. 

Applying stewardship to all assets* helps companies move towards sustainability 


For illustrative purposes only 
* Manulife Investment Management is an asset manager of public markets in equities and fixed income with 1,122 total number of company engagements conducted in 2020a. We are also asset managers of timber assets and green-certified buildings in our global real estate equity portfolio. Note that certain assets are not applicable to retail investors.

a Full report is not publicly available. More information is available upon request. Information as of 31 December 2020.

We also work with international working groups, market participants, policymakers, and non-governmental organizations (NGOs) to amplify our efforts in tackling sustainability issues. In 2017, we were a founding member of Climate Action 100+a, a five-year initiative that now represents US$55 trillion in investor capital globally as of August 2021. It’s the largest investor-led collaborative engagement initiative of its kind ever assembled. 

Our lead initiatives and sustainability partnersb

a www.climateaction100.org
b Selected affiliations.  (i) Leading harvest: www.leadingharvest.org. (ii) Task Force on Nature- Related Financial Disclosures: www.fsb-tcfd.org. (iii) Climate Action 100+: www.climateaction100.org. (iv) Asia Investor Group on Climate Change (AIGCC): www.aigcc.net/members. (v) Investor Network on Climate Risk: www.ceres.org/networks/ceres-investor-network. (vi) United Nations Environment Programme Finance Initiative (UNEP FI): www.unepfi.org/climate-change/tcfd/tcfd-for-banks. (vii) World Benchmarking Alliance: www.worldbenchmarkingalliance.org/wba-allies. (viii) SASB: www.sasb.org/investor-use/supporters. (ix) PRI: www.unpri.org. (x) Asian Corporate Governance Association: www.acga-asia.org. (xi) 30% Club Canadian Investor Group: 30percentclub.org/initiatives/investor-group.

Our commitment to transparency includes reporting on the outcomes of our sustainable-investing efforts and asset-management process and approach. We support the adoption of industry-wide standards for disclosure, including the framework outlined by the task force on climate-related financial disclosures (TCFD)a.

Governance and ethics

Stewardship report

Cluster munitions policy

Environmental impact

Climate change statement

Social responsibility

Manulife Investment Management SRI (Sustainable and Responsible Investing) report

 

a The Task Force on Climate-related Financial Disclosures (TCFD) framework, established in 2017 by the Financial Stability Board suggests disclosures in four categories: governance, strategy, risk management and metrics, and targets. Task Force on Nature- Related Financial Disclosures: www.fsb-tcfd.org.

Our case studies

We believe in action, making a positive impact on the community, environment, and investment industry. We aim to lead by example and share our stories to inspire change.

  • Problem: A lack of reporting on TCFD (Task Force Climate Related Financial Disclosures) and climate change strategy. 
  • Action: Our investment team guided the company on developing ESG best practices. It subsequently joined PRI and Climate Action 100+, developed a low carbon strategy and prepared its first TCFD report. 

Stewardship: Climate change risk management

We engaged with a Chinese insurance company on its ESG disclosure, TCFD alignment, and climate change strategy. We shared our view that climate change was a key risk for the company and outlined the additional information that it could provide to help our investment analysis. We also highlighted best practices from other global insurance companies in an effort to encourage changed behavior at the firm.

The company subsequently joined PRI and Climate Action 100+. It further developed a low-carbon strategy and began preparing its first TCFD report. This became the first TCFD report in China, and the company aims to be a leader in ESG standards in the country. We believe our engagement was a contributing factor to these changes. The actions taken by the company also bolstered our investment thesis by demonstrating that climate risks are being addressed. Our teams have since shared this firm’s TCFD report as a model for other companies in China.

For illustrative purpose only.

  • Problem: A lack of female representation and complicated shareholding structure within company. 
  • Action: Through our engagement and risk mitigation techniques, company improved gender diversity and streamlined cross-shareholding structure. 

Stewardship: Greenhouse gas (GHG) emissions, gender diversity, and systemic market risk

In 2019, we engaged with a Japanese steel company across several ESG topics in an effort to learn more about its risk mitigation techniques, encourage better disclosure, and seek other behavioral changes.

The steel industry is one of the highest GHG-emitting industries, and so we focused on environmental topics in our conversation with the issuer. The company completed a TCFD report, and for its scenario analysis, used both a 2°C and 4°C scenario. The company also identified significant potential to reduce carbon emissions in the future by using hydrogen in the ferro-coke process.

We also discussed human capital development efforts with specific attention to diversity. The firm noted that it’s working on improving gender diversity in the workplace and had already achieved three times its 2014 baseline.

Finally, we raised the issue of crossholdings—a governance risk systemic to the Japanese market. We encouraged the company to ensure any crossholdings were relevant to the business and to avoid an inefficient lockup of capital.

For illustrative purpose only.

  • Problem: Lacks governance framework that clearly defines company’s strategy on climate change and GHG reduction. 
  • Action: Collaboration under Climate 100+ to co-lead discussions with company management. The company subsequently updated its emission reduction targets, expanded its net zero target strategy, and improved disclosures. 

Collaboration: Co-lead efforts to reduce greenhouse gas (GHG) emissions

Manulife Investment Management is a member of the Climate Action 100+ initiative, which seeks commitments from the boards and senior management of target companies to take three actions:

  1. Implement a strong governance framework that clearly articulates the board’s accountability and oversight of climate change risks and opportunities
  2. Reduce GHG emissions across the value chain, consistent with the Paris Agreement’s goal of limiting the global average temperature increase to well below 2°C above preindustrial levels
  3. Enhance corporate disclosure in line with the final recommendations of the TCFD

Under the Climate Action 100+ umbrella, Manulife Investment Management co-led engagement efforts since 2018 with an oil and gas company to work toward the three goals above. Multiple discussions included senior management and members of the board. Over the course of 2019, the company took the noteworthy step of adopting a net zero aspirational target in relation to certain operations. The company subsequently updated short-term emission reduction targets that helped provide some insight into how the company could work toward achieving its target. Discussions are ongoing, and we continue to collaborate with other investors to support the company to increase its commitment to GHG emissions reduction, improved disclosure, and strengthened targets.

For illustrative purpose only.

  • Problem: An issuer’s debt was maturing at a time of significant market stress. 
  • Action: Our fixed income team collaborated with 10 other debt holders to successfully negotiate refinancing. 

Collaboration: Refinancing in the face of market stress

In 2020, one of our fixed-income teams led an engagement, in collaboration  with 10 other debt holders, to address debt set to mature in 2021 for an  environmental waste services firm. Our team, along with the issuer, had  significant concerns around the debt maturing at a time of significant market  stress when refinancing would be unlikely. We engaged in an active dialogue  with the company, bankers, and other debt holders to guide the company on market terms and open up the dialogue with large creditors. Our efforts  ultimately resulted in a successful refinancing of all the relevant debt, and we  continue to hold a position in the newly issued debt.

For illustrative purpose only.

1 Refer to Manulife Investment Management: Sustainable and responsible investing 2019 report here.

2 Refer to Manulife Investment Management: Stewardship report 2021 here.

 

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