Manulife Investment Management Publishes Inaugural TNFD Aligned Nature-related Disclosure for Timberland and Agriculture

Rhea-AI Summary

Manulife Investment Management (MFC) has published its inaugural timberland and agriculture nature disclosure, aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD). The report outlines the responsible approach to stewardship of timberland and agricultural assets, totaling over $15 billion. Manulife IM has supported the TNFD since its early stages, championing the release of the TNFD's final recommendations and reporting framework. The TNFD aims to bring changes to the culture and actions of companies and financial institutions through risk management and mainstream corporate reporting as it relates to nature-related assessment and disclosure. Manulife IM believes independent third-party sustainability certification is a comprehensive mechanism for demonstrating sustainable asset management. Long-term thinking is fundamental to timberland and agriculture investment management, with financial models and asset management plans forecast over 50 years for timberland and 10 to 30 years for agriculture.

Positive

• Manulife IM has supported the TNFD since its early stages
• The report outlines the responsible approach to stewardship of timberland and agricultural assets, totaling over $15 billion
• Long-term thinking is fundamental to timberland and agriculture investment management

Negative

• None.

Insights

Sustainability Analyst

Manulife Investment Management's commitment to a nature-positive future, as demonstrated by their TNFD-aligned nature disclosure, signals a robust approach to integrating sustainability into their investment strategy. This reflects a broader industry trend where environmental, social and governance (ESG) considerations are becoming critical in asset management, particularly for natural capital assets like timberland and agriculture.

From a sustainability perspective, the alignment with TNFD and the use of proprietary tools for ESG evaluation in transactions can be seen as a proactive measure to mitigate long-term risks associated with climate change and biodiversity loss. The fact that all managed forests are certified under recognized sustainability standards such as SFI or FSC and that the agriculture investments follow the Leading Harvest Farmland Management Standard, enhances the credibility of Manulife IM's sustainability claims.

These certifications and the company's long-term investment horizons align with the growing investor demand for sustainable and responsible investment options. The focus on sustainable asset management is likely to attract investors who are increasingly aware of the risks and opportunities associated with nature-related financial disclosures.

Financial Analyst

The disclosure of Manulife Investment Management's nature-positive commitments, particularly in the context of their $15 billion natural capital assets, is a significant development for investors. It provides a clear signal that the company is actively managing the long-term risks and opportunities associated with its substantial timberland and agriculture assets.

Investors and stakeholders are increasingly valuing transparency in how companies address ESG factors, which can impact the long-term viability and performance of investments. Manulife IM's decision to align with TNFD recommendations and to report on their nature-related dependencies and risks is likely to be well-received in the market. This could potentially lead to a positive impact on the firm's reputation and, by extension, its stock performance as it aligns with investor values and risk management priorities.

Risk Management Expert

Manulife Investment Management's inaugural timberland and agriculture nature disclosure, in line with TNFD recommendations, represents a strategic approach to risk management. By anticipating and disclosing nature-related risks, Manulife IM is positioning itself to manage potential financial impacts arising from environmental changes and regulatory shifts.

The emphasis on materiality in both investment processes and operations, as well as the adoption of long-term financial models, are indicative of a comprehensive risk management strategy. This approach not only serves to protect the assets under management but also to reassure investors of the company's commitment to long-term value creation and resilience. The integration of these risk considerations into their investment due diligence and operational management is a forward-thinking move that will likely be a benchmark for industry peers.

Milestone report shares the firm's commitments to a nature-positive future

TORONTO, Jan. 18, 2024 /PRNewswire/ - Manulife Investment Management (Manulife IM) announced it has published its inaugural timberland and agriculture nature disclosure, aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD). As an early supporter of TNFD, Manulife IM will be an early adopter with its publication of its TNFD-aligned disclosure. As the world's largest manager of natural capital, Manulife IM prioritized issuing this report, which outlines its responsible approach to the stewardship of timberland and agricultural assets.¹ Manulife IM oversees approximately 5.5 million acres of timberland across the United States, Canada, New Zealand, Australia, Brazil, and Chile and manages approximately 400,000 acres of prime farmland in major agricultural regions of the United States and in Canada, Chile, and Australia. These assets total more than $15 billion as of June 30, 2023, as part of Manulife IM's comprehensive private markets strategies.

"Although the TNFD is a recent initiative, we have maintained a longstanding commitment to the responsible stewardship of timberland and farmland for over 30 years," said Brian Kernohan, Chief Sustainability Officer, Private Markets, Manulife Investment Management. "Our first TNFD-aligned nature disclosure marks an important milestone, and it further attests our ongoing pursuit of excellence in responsible operations and transparent reporting as well as our commitment to nature and our support for the TNFD framework."

The TNFD aims to bring changes to the culture and actions of companies and financial institutions through risk management and mainstream corporate reporting as it relates to nature-related assessment and disclosure. The TNFD recommends 14 disclosures covering governance, strategy, risk and impact management, and metrics and targets, to promote the provision of clear, comparable, and consistent information by companies to investors and other providers of capital. Manulife IM has supported the development of the TNFD since its early stages, championing the release of the TNFD's final recommendations and reporting framework in September 2023.

"Nature-related dependencies, impacts, risks, and opportunities are thoroughly considered throughout our business, from the initial stages of investment due diligence to the operational management. We believe it's our responsibility to keep natural capital assets healthy and productive over the long term," said Thomas Sarno, Global Head of Timberland Investments, Manulife Investment Management. "We strive to proactively assess and manage nature-related risks and opportunities to help our clients achieve their objectives and build resilient portfolios."

"Nature plays a vital role in the future success of our businesses, the economy, and society," added Oliver S. Williams IV, Global Head of Agriculture Investments, Manulife Investment Management. "Alignment with the TNFD general requirements and disclosures, with the data and information currently available, is a significant step in our journey to achieving key priorities of our sustainability program supporting climate change mitigation and positive biodiversity and nature-related outcomes."

Highlights from the report include:

• Materiality in the investment process
  • Across both timberland and agriculture, Manulife's IM's stewardship approach focuses on climate, nature, and people throughout the cycle of an investment.
  • Since 2021, the firm has used a proprietary process—its sustainability tool kit—that was co-developed in house by its sustainability, acquisitions, and operations teams to identify, assess, and score environmental, social, and governance components of every transaction.
  • Together with its deforestation policy, carbon principles, and carbon tool kit (used specifically for forest carbon project evaluation) this approach is designed to systematically consider all identified material sustainability considerations.
• Materiality in operations
  • Manulife IM believes independent third-party sustainability certification is a comprehensive mechanism for credibly demonstrating sustainable asset management and, critically, that it provides independent assurance to stakeholders.
  • As of December 31, 2022, 100% of Manulife IM's managed forests were certified under either the Sustainable Forestry Initiative^® (SFI) or Forest Stewardship Council^® (FSC).² In agriculture, 100% of its U.S. farmland investments were certified in June 2022 to the Leading Harvest Farmland Management Standard by a third party,³ and other agriculture investments have participated in Leading Harvest pilot programs in Australia and Canada. Some assets have been certified to additional agriculture standards on a case-by-case basis. Overall, 223 of the 245 properties (91%, or approximately 80% of agriculture assets under management) in the global agriculture investment portfolio carried one or more third-party certifications.
• Consideration of time horizons
  • Long-term thinking is fundamental to timberland and agriculture investment management and Manulife IM's experience operating timberland and farmland assets over the past 30 years has shaped and refined its ability to manage sustainably over extended time horizons.
  • Manulife IM's financial models and asset management plans are forecast over 50 years for timberland, while for agriculture the forecast is typically 10 to 30 years ahead, depending on the type of asset.

1 IPE research, as of February 5, 2023. Ranking is based on total natural capital assets under management (AUM), which includes forestry/timberland and agriculture/farmland AUM. Firms were asked to provide AUM and the as of dates vary from December 31, 2021, to December 31, 2022.

2 As of December 31, 2022, 100% of our forests were certified under either SFI (3.2 million acres in the United States and Canada) or FSC (2.2 million acres in Australia, New Zealand, Brazil, and Chile).

3 Certification as of June 2022, by Leading Harvest and is based on an annual assessment of the conformation to the Farmland Management Standard. Manulife Investment Management's timberland and agriculture team (then operating as Hancock Natural Resource Group) is a founding member of Leading Harvest. In addition, Oliver Williams, global head of agriculture, is current chair of the Board of Directors for Leading Harvest. For more information on Leading Harvest, please see leadingharvest.org/about.

About Manulife Investment Management 
Manulife Investment Management is the brand for the global wealth and asset management segment of Manulife Financial Corporation. Our mission is to make decisions easier and lives better by empowering investors for a better tomorrow. Serving more than 17 million individuals, institutions, and retirement plan members, we believe our global reach, complementary businesses, and the strength of our parent company position us to help investors capitalize on today's emerging global trends. We provide our clients access to public and private investment solutions across equities, fixed income, multi-asset, alternative, and sustainability-linked strategies, such as natural capital, to help them make more informed financial decisions and achieve their investment objectives. Not all offerings are available in all jurisdictions. For additional information, please visit manulifeim.com.

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SOURCE Manulife Investment Management

FAQ

What is the nature of Manulife Investment Management's (MFC) inaugural timberland and agriculture nature disclosure?

Manulife IM has published its inaugural timberland and agriculture nature disclosure, aligned with the recommendations of the Taskforce on Nature-related Financial Disclosures (TNFD).

What is the aim of the TNFD?

The TNFD aims to bring changes to the culture and actions of companies and financial institutions through risk management and mainstream corporate reporting as it relates to nature-related assessment and disclosure.

What is the approach of Manulife IM to demonstrate sustainable asset management?

Manulife IM believes independent third-party sustainability certification is a comprehensive mechanism for demonstrating sustainable asset management.

How long are the financial models and asset management plans forecast for timberland and agriculture?

Long-term thinking is fundamental to timberland and agriculture investment management, with financial models and asset management plans forecast over 50 years for timberland and 10 to 30 years for agriculture.