This document provides an overview of the framework of Manulife Investment Management (Hong Kong) Limited (“Manulife IM (HK)”) to govern its management of climate-related risks.
1. Governance Structure
Roles and Oversight of the Board of Directors
The Board of Directors of Manulife IM (HK) (the “Board”) has overall responsibility for the governance of Manulife IM (HK) and the oversight of Manulife IM (HK)’s management team, including the oversight of the management of climate-related risks in the investments of which Manulife IM (HK) is the investment manager (“Manulife IM (HK) Investments”). These investments can be broadly categorised as follows:
a. investments managed by Manulife IM (HK)’s investment teams (“Self-Managed Assets”);
b. investments where management is delegated to affiliated investment managers within Manulife Investment Management (“Affiliate Managed Assets”); and
c. investments where management is delegated to investment managers not affiliated to Manulife Investment Management (“Third-party Managed Assets”).
Manulife IM (HK) relies upon Manulife Investment Management’s structure, processes and expertise to manage climate-related risks, as further elaborated below.
Manulife Investment Management has established a global governance structure to oversee its investment teams’ sustainable investing activities, which is outlined in the . Please refer to the section entitled “Governance” in the Sustainable Investment and Sustainability Risk statement for further information.
Manulife IM (HK) is supported by the Manulife Investment Management’s Sustainable Investment team, which is led by the Chief Sustainable Investment Officer and is tasked with providing Environmental, Social, and Governance (“ESG”) expertise including climate-related issues to Manulife Investment Management’s entities globally. The Sustainable Investment team works closely with Manulife Investment Management’s investment teams and provides subject matter expertise and reviews climate related risk exposures for Self-Managed Assets and Affiliate Managed Assets.
Further, Manulife Investment Management's Global Manager Research (“GMR”) team supports the Board by providing oversight of Third-party Managed Assets. GMR team performs review on investment managers of the Third-party Managed Assets regularly to monitor material non-compliance with the SFC's climate-related risk requirements. Findings will be escalated to the relevant Manulife IM (HK)’s management team and the Board as needed.
The Board receives reports on and reviews the risk management framework covering climate-related risks and the climate-related risks associated with the Manulife IM (HK) Investments at least semi-annually. These reports enable the Board to understand and consider the climate-related risks entailed in Manulife IM (HK) Investments, and to oversee that the respective investment managers for the Affiliate Managed Assets and the Third-party Managed Assets continue to consider these risks as part of their investment processes.
The Board receives training from time to time on climate-related topics to enable it to successfully discharge these responsibilities. The training includes but is not limited to an overview of climate change and the associated climate-related risks, how the climate-related risks are assessed, new developments on climate-related topics such as changes in scientific understanding or other factors which may have an impact on climate-related risks and the assessment of climate-related risks.
Manulife Investment Management ensures that suitably qualified and knowledgeable personnel including but not limited to members of Sustainable Investment and GMR teams are available to attend relevant Board meetings to present the content of climate-risk related materials provided to the Board and to respond to questions raised by the Board as and when required.
Roles and Responsibilities of Manulife IM (HK)’s Management
Manulife IM (HK)’s management team is responsible for ensuring that investment managers of Manulife IM (HK) Investments duly consider climate-related risks in their investment processes. To monitor the status and progress of the investment managers’ efforts to manage climate-related risks, Manulife IM (HK)’s management team obtains and reviews periodic updates from dedicated teams within Manulife Investment Management.
Manulife IM (HK)’s management team places reliance upon the investment managers executing their investment processes and considering climate-related risks of the investments to the extent that are relevant and financially material, as well as engaging with the management teams of investee companies. Engagement is used as a tool to both gather information and influence other stakeholders to adopt best practices. Engagement with investee companies helps deepen their understanding of sustainability issues underpinning their strategies while providing opportunities for them to better understand Manulife Investment Management’s investment process and objectives. As investors, the investment managers also play a critical role in encouraging companies to adopt sustainable business practices that promote stable long-term growth and reduce the potential impact of material sustainability risks over time. Investment managers engage with companies on a range of substantive corporate, strategic, and ESG matters including climate-related risks that could alter their valuation, fundamental standing, or strategy. Manulife IM (HK) management’s goal is to ensure that all investment managers integrate climate-related risks in this way.
For Self-Managed Assets and Affiliate Managed Assets, Manulife IM (HK)’s management team relies upon the global resources of Manulife Investment Management, including in particular the Portfolio Managers, Chief Investment Officers, Sustainable Investment team and oversight functions to ensure that climate-related risks are being incorporated in the investment management process of such Manulife IM (HK) Investments.
For Third-party Managed Assets, the GMR team performs review on investment managers regularly to monitor material non-compliance with the SFC's climate related risk requirements. Findings will be escalated to the relevant Manulife IM (HK)’s management team as needed.
2. Investment Management and Risk Management Processes
Manulife Investment Management has established a global framework in ongoing monitoring of sustainability risks and factors relevant and material to an investment (which include climate-related risks) as outlined in the section entitled “Due Diligence and Decision Making” in the .
For Self-Managed Assets and Affiliate Managed Assets, Manulife Investment Management’s approach to monitor sustainability risks is described in the section entitled “Portfolio Monitoring” and “Sustainability Risks and Factors Throughout the Investment Lifecycle” in the . For clarity, “Sustainability Risks” referenced in the Sustainable Investing and Sustainability Risk statement covers climate-related risks. A variety of tools and metrics are used to manage climate alignment, including corporate carbon footprinting, portfolio warming potential, and strategy-level emissions. The tools and metrics used may vary by portfolio and change over time. Manulife IM (HK) requires all investment managers of Self-Managed Assets and Affiliate Managed Assets to comply with all relevant regulatory requirements.
Whilst climate-related risks are inherently uncertain, and the extent of the exposure of underlying investments to climate-related risks may not necessarily be known or explicitly disclosed by the investee companies within the Manulife Investment Management investment portfolios, to identify and assess the climate-related risks, Manulife Investment Management subscribes to third-party information and research and publicly available datasets which enable Manulife IM (HK) to assess physical and transition of climate-related risks to the extent that such third-party data is reasonably available at reasonable cost and incorporates consideration of such data where relevant and financially material into the investment process, including relying on third-party assessments of the potential impact on performance of the underlying investments driven by these issues. As many issuers do not disclose such data for climate risk assessments, Manulife Investment Management places reliance on third parties and considers these impacts to the extent that assessments are available from third parties at a reasonable cost. Manulife Investment Management continuously reviews the market for such data and add or remove third-party providers as appropriate. As above, information on these risks is provided to both Manulife IM (HK)’s management team and the Board through the reports that they receive.
Manulife IM (HK) requires investment managers of Third-party Managed Assets to demonstrate that they comply with all relevant regulatory requirements in relation to climate-related risks and relies on the assessment conducted by the GMR team to monitor this. As above, the GMR team performs review on investment managers of Third-party Managed Assets regularly to monitor for material non-compliance with the SFC's climate related risk requirements.
Notwithstanding the foregoing, certain types of investments may be managed differently where the sustainable investing approach is impractical or impossible, for example in relation to certain instrument types where sustainable comparable alternatives are unavailable. For further details in relation to Manulife Investment Manager’s approach in relation to Self-Managed Assets and Affiliate Managed Assets falling under such category, please refer to the section entitled “Passive products, other asset classes and delegation to third-party investment managers” in the . Pursuant to this policy, where another approach is adopted in relation to an investment strategy, the details will be disclosed where relevant.
For Third-party Managed Assets, Manulife IM (HK) relies on the GMR team’s assessment as to whether climate-related risks are irrelevant to certain types of investment strategies. Any exceptions at the entity or fund level will be disclosed where relevant.
3. Engagement Policy
Manulife IM (HK) follows the ESG Engagement Policy set forth by Manulife Investment Management where Self-Managed Assets and Affiliate Managed Assets are under scope. Please refer to Manulife Investment Management’s for further details.
For Third-party Managed Assets, the individual third-party manager implements its own engagement and proxy voting framework as part of their investment management process in regards to ESG. These are also taken into consideration in GMR’s regular third party manager reviews.
Manulife Investment Management publishes a on an annual basis which includes a section on engagement. Investment managers engage with companies on a range of substantive corporate, strategic, and ESG matters including climate-related risks that could alter their valuation, fundamental standing, or strategy. Case studies to further describe the engagement approach taken with investee companies in addressing are part of the engagement section. Further to the stewardship report, selected are made available on Manulife IM (HK)’s website.