Manulife Investment Management, a long-standing Canadian financial services firm, has launched a Global Climate Action Fund for European institutional investors in response to demand from the European segment of their investment management services.
Manulife opens a fund for the European market investing in companies demonstrating action on climate change around the world.
ESG tools and techniques have been adopted for some years on the recognition of the stronger returns they bring and this is communicated on the company’s website. A climate action fund implies going further to choose investments on their climate action credentials.
The demand is coming from Europe, but the trend suggests we should expect to see increased focus, in Asia particularly.
Manulife has been incorporating ESG into its investment strategy for a few years. It has an A+ from UN PRI for ESG strategy and governance and ESG integration in listed equity and fixed-income SSA.
Manulife launched its Global Climate Action strategy in 2021 with a science-aligned target of cutting emissions sufficiently to keep global temperature increase to beneath 2°C degrees, with a goal of 1.5° C. The SBTi (Science Based Targets Initiative) calls for at least a halving of emissions by 2030 from its signatories and net zero by 2050.
Manulife Investment Management looked into the performance of banking and financial institutions in climate change mitigation on the premise that banks and financial institutions have a central role to play in decarbonising the planet. It concluded that commitments continue to outpace action, whilst at the same time there is growing pressure to build resistance against climate change.
Of the 36 banks it analysed – 75% of the MSCI All Country World Index’s bank sector weight – they report that only 3 are fully aligned with the Paris Agreement. Lack of action is compounded by cascading climate risks that are affecting the global economy.
Reputational risk is becoming much more tangible. The way forward, Manulife says, is for organisations to take action by aligning their emissions trajectories with the latest science and have their emissions reduction targets validated by a certified third party such as the SBTi.
The fund will look for sustainable investment opportunities
With the Global Climate Action Fund, Manulife looks to invest in companies which are making positive contributions to climate change. It says the science-based targets are its main barometer.
Whilst this indicates that emission reduction plans may be the main item under the spotlight, the fund is classified as Article 9 under the SFDR regulation, the classification of which are products with a sustainable investment objective. Article 9 funds are more stringent in their sustainable investment criteria.
Manulife Investment Management’s stewardship activities in its public markets portfolios include direct engagements, collaborative engagements, and proxy voting.
Manulife has been going since 1887. It has $485 billion in assets under management and offices in 19 geographies. Manulife Investment Management is particularly strong in Asia where it has over 120 years of experience and is in 10 markets. As well as investment Manulife offers insurance, wealth management and retirement plans.
Simultaneously this week in America, one of the world’s largest pension funds, CalSTRS, announced climate screening for its investment portfolio.