Manulife Investment Management recently announced the release of its inaugural stewardship report. The report highlights the firm’s commitment to stewardship codes across a variety of jurisdictions and developed in accordance with the 12 stewardship principles outlined by the UK stewardship code, one of the first and most comprehensive global codes. Manulife Investment Management believes that without strong stewardship the smooth functioning of financial markets could be compromised. The report details the impact Manulife Investment Management seeks to have as an active asset manager committed to sustainability-focused corporate engagement; and how the firm aligns its asset ownership practices with stewardship codes around the globe.
Across its assets and investments, Manulife Investment Management sees being an active steward as a critical part of what it means to be an active manager. The firm’s active approach is central to its ability to protect and grow the value of the assets owned or managed on behalf of clients. The teams identify ways to fortify management, reporting, and sustainability practices and then work with stakeholders to strengthen these frameworks supporting the assets owned or operated by the firm.
“Without strong stewardship, an investment’s integrity can be compromised; in turn, the asset manager/asset owner relationship can suffer, and the smooth functioning of financial markets can break down,” said Paul R. Lorentz, president and CEO, Manulife Investment Management. “The impact and outcomes of actions matter now more than ever.”
Over the last five years, Manulife Investment Management has significantly increased the number of conversations with issuers that include a focus on sustainability. Increasingly, there is a focus on measuring the success in influencing firms to mitigate the impact of material sustainability risks, such as diversity and environmental impact, and drive long-term value creation.
Manulife Investment Management also highlighted that, while global stewardship codes generally outline similar best practices, it’s important to understand and recognize nuances when executing against specific codes. These differences put an emphasis on the role of active asset managers to understand and differentiate between the various global stewardship codes and the importance of taking a nuanced approach to corporate engagements. Ultimately, these considerations may lead to better outcomes for investors.
“While the application of stewardship practices may differ, depending on the geographies, size, asset class, and associated rights of our investments, our objective is always the same: to preserve and enhance client value by continuously improving our management of sustainability issues,” said Mr. Lorentz.
Addressing systemic risk through stewardship and engagement
Manulife Investment Management believes investors can play a central role in addressing systemic risks in financial markets. While systemic risks – such as climate change – can never be entirely guarded against in investment portfolios and business operations, given the ubiquitous nature of these risks, the firm’s overlapping risk management processes seek to ensure that systemic risk is addressed in clients’ portfolios and with respect to the assets it owns and operates.
For example, in 2017, Manulife Investment Management was a founding member of Climate Action 100+, an initiative that now includes more than 575 investors from around the globe representing US$54 trillion. The firm was also designated a member of the PRI Leaders’ Group 2020 — one of only 36 firms from more than 2,400 signatories — for demonstrating a breadth of responsible investment excellence and leading the industry in climate reporting.
“We may take a variety of actions toward managing climate-related risks and opportunities to appropriately price and mitigate climate risk,” said Peter Mennie, global head of ESG research & integration, public markets, Manulife Investment Management. “However, our preferred position is to engage directly with companies to encourage effective implementation of climate risk mitigation and adaptation strategies, reserving the right to divest of any investment.”
Manulife Investment Management believes that strong stewardship practices are vitally connected to enhancing the resiliency of clients’ assets, client relationships, and the health of the markets in which the firm conducts its asset management responsibilities.
Brian J. Kernohan, chief sustainability officer, private markets, Manulife Investment Management, added, “Across private markets assets, we have made progress in assessing climate risk and resiliency in our portfolios. Where we own and operate assets in timberland, agriculture and real estate, we have provided additional transparency through third-party portfolio review and climate disclosures to enhance the value of our assets and have even more impact on all our stakeholders. In our infrastructure and private equity and credit investments, we focus on building strong relationships with companies, sponsors, and co-investors, which enables a meaningful approach to sustainability and enhances our influence over key assets and portfolio companies.”
Mr. Lorentz concluded: “We believe that strong stewardship is inseparable from good investing and ensuring portfolio resiliency requires us to do more than traditional fundamental analysis. Being a good steward in the financial markets means focusing on the long term, prioritizing the sustainability of our investments and operations, and expanding the view of what matters beyond financial value.”
About Manulife Investment Management
Manulife Investment Management is the global wealth and asset management segment of Manulife Financial Corporation. We draw on more than a century of financial stewardship and the full resources of our parent company to serve individuals, institutions, and retirement plan members worldwide. Headquartered in Toronto, our leading capabilities in public and private markets are strengthened by an investment footprint that spans 17 countries and territories. We complement these capabilities by providing access to a network of unaffiliated asset managers from around the world. We’re committed to investing responsibly across our businesses. We develop innovative global frameworks for sustainable investing, collaboratively engage with companies in our securities portfolios, and maintain a high standard of stewardship where we own and operate assets, and we believe in supporting financial well-being through our workplace retirement plans. Today, plan sponsors around the world rely on our retirement plan administration and investment expertise to help their employees plan for, save for, and live a better retirement.
As of December 31, 2020, Manulife Investment Management had CAD$966 billion (US$758 billion) in assets under management and administration. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.