Manulife IM highlights natural capital’s role in sustainable investing strategies

Manulife Investment Management (Manulife IM) has released three comprehensive reports highlighting its approach to integrating climate and nature related factors into asset management and portfolio construction.  

These reports—the Natural Capital Sustainability report, the Task Force on Climate-Related Financial Disclosures (TCFD) report, and the Sustainable and Responsible Investing (SRI) report—offer insights for market participants interested in sustainable investing and evaluating investment risks and opportunities across both public and private markets. 

Manulife IM emphasizes its commitment to delivering strong long-term investment performance and highlights the critical role natural capital plays in human health.  

The reports also underscore the potential of timberland and agriculture assets to add value to investment portfolios while benefiting the environment.  

One of the firm’s key strategies within its climate and natural capital investment solutions involves offering investors opportunities to invest in timberlands that generate high-integrity carbon credits through enhanced management practices that increase the amount of stored carbon in forests. 

Paul Lorentz, president, and CEO of Manulife IM, expressed enthusiasm about the release of these reports, stating, “We believe that climate-related risks and other sustainability factors can materially impact long-term financial value and, consequently, our clients’ investment objectives.” 

“Our primary goal is to enhance the returns of the capital we manage on behalf of our clients by integrating all financially material risks, including sustainability factors, into our investment processes,” he continued.  

The Natural Capital Sustainability report provides a detailed look at the significance of natural capital to institutional investment portfolios and the global economy's reliance on these assets. Some of the report’s key highlights include: 

• Manulife IM’s timberland properties have planted over 50 million seedlings, produced enough lumber to construct more than 100,000 houses, generated fibrewood to create approximately 2.2 million tons of paper, and produced biomass to supply electricity to 1,500 American homes for a year. 

• In 2023, 100 percent of the firm’s agriculture portfolio client properties employed at least one regenerative practice, with 78 percent using four or more such practices.  

• The firm is on track to meet its five nature targets, aligned with the Finance for Biodiversity Pledge, by 2025. These targets include enhancing collaboration on assessment methodologies, integrating biodiversity into ESG policies, assessing the impact of investments on biodiversity, setting science-based targets to improve biodiversity outcomes, and annually reporting progress. 

Brian Kernohan, chief sustainability officer at Manulife IM, remarked, “Natural capital is not just a concept; it’s a measurable and monetizable reality that provides intrinsic value to the global economy. We see nature as a mispriced asset that offers true economic and societal value for everyone’s benefit.” 

The TCFD report highlights Manulife IM’s efforts to incorporate climate-related risks and opportunities into its investment decisions. The report focuses on the firm’s governance, strategy, risk management, and the metrics and targets it employs. Notable highlights from the TCFD report include: 

• 90 percent of Manulife IM’s global real estate equity portfolio has achieved certification under a green building standard, such as LEED, ENERGY STAR, or BOMA BEST. 
• The firm’s managed forests and farms have removed an estimated 1.5 million tons of CO2e from the atmosphere over a five-year rolling average. 
• Manulife IM aims to expand access to a broader range of sustainable investing options for its clients. 

The SRI report offers a comprehensive overview of Manulife IM’s approach to sustainable investing, including its governance, stewardship practices, PRI scorecard, and other sustainability achievements. Key highlights from the SRI report include: 

• The publication of Manulife IM’s inaugural nature report, aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD), detailing how the firm manages nature-related risks and opportunities within its timberland and agriculture portfolios. 
• The achievement of a GRESB 5 Star rating for the sixth consecutive year. 
• The formalization of a sustainable investing strategy for the firm’s private equity and credit platform, including the establishment of near-term priorities and long-term commitments. 
• The development of a firmwide client-directed exclusions framework. 
• The publication of a water statement, underscoring the critical importance of water to human health, livelihoods, ecosystems, the global economy, and the future of asset management. 

“As we continue to navigate the dynamic landscape of sustainable investing, our reporting aims to provide comprehensive insights that drive positive change and foster long-term sustainability,” Kernohan concluded.  

“We remain committed to enhancing our reporting so that all stakeholders can gain a clear understanding of our efforts to manage climate impact, address risk exposures, and create long-term value.”