April 29, 2022
What is ESG investing?
The importance of ESG factors in investing has grown rapidly, leaving many onlookers playing catch-up. In this article, we’ll explain what ESG investing is and what it means for investors.
Our approach to sustainable investing
What sets us apart?
Unless otherwise noted, any references herein to sustainability reflect the general approach of Manulife Investment Management to integrating sustainability risk considerations into our investment decision-making processes, which may not extend to some of the products offered or distributed by Manulife Investment Management for which integration of sustainability factors is not applicable (or where another approach to integration of sustainability factors is adopted), including where a third party is involved in the management of the assets of such product. For complete information of the products, please see the applicable offering documents. Participation as signatory of various global or local initiatives relates to the approach taken by Manulife Investment Management as an entity, not by any of the products it’s offering.
Stewardship
Unique interactions with equity and fixed-income issuers, influencers, regulators, nongovernmental organizations, governments, and vendors in 2024
Engagement and collaboration
To help inform our sustainable investing practices, we engage and collaborate with sustainability-focused organizations, including:
- Climate Engagement Canada: We joined this initiative when it launched in 2022 and have engaged with several of our focus list companies on climate transition planning, disclosure, and a just transition.
- 30% Club Investor Group Canada: In the five years since we joined the 30% Club Investor Group in Canada, companies on the TSX60 have moved from <20% representation by women on boards to >34%.
- Canadian Sustainability Standards Board (CSSB): We have a seat at the board that is setting sustainability standards for Canadian companies to report on their sustainability risks and opportunities.
- Nature and biodiversity: We're involved in several collaborations that encourage companies to reduce their impact on nature and biodiversity loss, and report on their risk and dependencies on nature, including Finance for Biodiversity, Nature Action 100+, and the Valuing Water Finance Initiative.
Recognition
Retained signatory status to the UK Stewardship Code as of 2024
Retained our Avant Gardist rating1 in the 2024 Responsible Investment Brand Index
Important disclosures
Important disclosures
1 Hirschel and Kramer (H&K) Responsible Investment Brand Index (RIBI™) highlights the ability of more than 600 asset managers globally to translate their efforts towards responsible investment into their core brand. The RIBI™ is made up of two ratings: the Commitment rating which focuses on hard factors (e.g., level and quality of Listed Equity voting), and the Brand rating which focuses on soft factors (e.g., the existence of a Purpose statement and the quality of its expression). The Avant-Gardist rating is given to firms with above average on Commitment rating and Brand rating. Further information here:http://www.ri-brandindex.org/
Our approach
Our approach to sustainable investing rests on three pillars: integration, stewardship, and collaboration. While their expressions may vary by asset class and investment team, each pillar is fundamental to our investment approach and forms the basis on which we pursue our sustainability objectives and those of our clients.
Integration
We combine active investment management with a deep understanding and integrated analysis of sustainability issues.
Stewardship
We work with entities in which we invest to help make them more sustainable over the short, medium and long-term.
Collaboration
We work with a range of market participants, policy makers, regulators and industry organizations to address global sustainability challenges.
Thematic investment
Our approach to sustainability extends to investments that target specific sustainability themes and objectives such as climate change.
Third-party partners
We carry out extensive research and due diligence on the sustainability practices of third-party managers to be able to offer you a range of investing solutions from leading investment managers.
Stewardship
We believe engaging and collaborating with stakeholders on material sustainability issues can improve our understanding of the risks and opportunities of our investments. Discover more about our outcome-orientated approach to stewardship.
Read our latest case studiesTo us, strong stewardship is inseparable from good investing.
Our beliefs support our culture of stewardship
Sustainability factors can have a material impact on financial value
We believe sustainability factors can materially impact financial value, therefore we integrate financially material sustainability risks and opportunities into our investing processes.2
We believe active managers are well placed to manage stewardship effectively
We’re able to bring our experience to work with company management to encourage effective change. Where we own and operate assets, we believe it’s our responsibility to pursue the best sustainability processes and standards for our firm, our employees, and our clients.
We believe in offering clients sustainable investing choices
We believe in offering choice to investors, from integrating sustainability factors through to impact investments. A broad range of products enables investors to better meet an equally broad range of goals.
Important disclosures
Important disclosures
2 Source: Gunnar Friede et al., “ESG and financial performance: Aggregated evidence from more than 2000 empirical studies,” Journal of Sustainable Finance & Investment, October 2015, Volume 5, Number 4 https://www.tandfonline.com/doi/full/10.1080/20430795.2015.1118917
What is sustainable investing?
Sustainable investing refers to the incorporation of sustainability risks and opportunities into the selection and management of investments. By systematically integrating these factors across every stage of the investment process, sustainable investing seeks to improve a portfolio's risk-adjusted return potential.
Our impact: sustainable investing case studies
We believe active ownership practices are at the center of good stewardship, helping drive strong risk-adjusted investment return potential over time while we seek to make a positive impact on the environment and society.
A wide range of factors that can affect investment returns
Environmental
How a company's operations affect the natural environment, and how the natural environment affects the company.
- Climate change and carbon emission
- Air and water pollution
- Biodiversity
- Energy efficiency
- Deforestation
- Waste management
- Water scarcity
Social
The relationship between a company and its employees, suppliers, and communities.
- Customer satisfaction
- Data protection and privacy
- Gender and diversity
- Community relations
- Employee engagement
- Human rights
- Labour standards
Governance
The structures or systems a company has put in place to ensure effective direction and control.
- Board composition
- Executive compensation
- Audit committee structure
- Bribery and corruption
- Lobbyings
- Political contributions
- Whistle-blower schemes
For illustrative purposes only.
Sustainable investing: why now?
As of 2024, US$30 trillion⁵ was invested globally in sustainable and responsible strategies, while in Canada almost half of professionally invested money was allocated to these types of strategies. While it began as a specialist approach, sustainable investing is now a powerful and enduring megatrend that’s transforming how people and institutions are investing around the globe.
Sustainable investing by the numbers
US$2.4 trillion
Sustainable investing assets in Canada in 20243
47%
Of professionally managed assets in Canada are in responsible investments3
67%
Of surveyed investors in Canada want their financial advisors to inform them of sustainable investing options4
Important disclosures
Important disclosures
3 Global Sustainable Investment Review 2024 – Global Sustainable Investment Alliance.
4 2024 RIA investor opinion survey.
Related viewpoints
May 14, 2024
The global water challenge: risks and opportunities that all investors should consider
Manulife Investment Management is committed to helping clients achieve their objectives, build resilient portfolios—including in relation to climate change—and, where appropriate, positively affect nature. We believe water-related risks and opportunities can be financially material factors that should be integrated into investment strategies and operational asset management.
May 14, 2024
It’s never too early to think long term—how investors can align with net zero by 2050
Many countries, cities, companies, and other institutions have joined forces to reduce global GHG emissions, but we believe investors also have a crucial role to play in achieving net zero by 2050. We expand on three key elements.
Important disclosures
Important disclosures
Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the fund facts as well as the prospectus before investing. Mutual funds are not guaranteed, their values change frequently and past performance may not be repeated.
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