2020
ClimateReportAssessing and managing
climate-related impacts, risks
and opportunities

Introduction
We take climate change seriously. We have a moral responsibility
to mitigate it, a business imperative to adapt to it, and a unique
opportunity to address it. In this document, we consider whatclimate change means, as well as our role in assessing andmanaging climate-related impacts, risks and opportunities.
Hancock Natural Resource Group (HNRG), a Manulife Investment
Management Company, is pleased to release our inaugural climate
disclosure. This report follows the voluntary disclosure framework
developed in 2017 by the Financial Stability Board’s Taskforce for
Climate-related Financial Disclosures (TCFD). Though it’s our first
disclosure, climate change mitigation and adaptation have beencore to our business since our founding in 1985. As managers oftimberland and farmland—biological assets subject to a changing
climate and capable of helping to stabilize it—the day-to day

reality of running our business means that we witness the impactsof climate change. And we also see opportunities to respond to it.
Focusing exclusively on climate change, this report expandson our annual Sustainability and Responsible Investing (SRI)
report released in April 2020. There we outline our management
approach to climate stability—one of five pillars of our SRI
program—providing numerous examples of the operational
actions and business decisions we have taken toward this goal.
In this disclosure, we address the risks climate change poses toour timberland and agriculture businesses, the opportunities it
presents, and the ways in which we are responding to them.
Our disclosure is structured as per the recommendations of the
TCFD, with four key sections addressing eleven topics.

Recommendation and Supporting Recommended Disclosures

Governance

Strategy

Risk Management

Metrics and Targets

Disclose the organization’s governance around climate- related risks
and opportunities.

Disclose the actual and potential
impacts of climate-related risks andopportunities on the organization’s
businesses, strategy, and financial
planning where such information ismaterial.

Disclose how the organization
identifies, assesses, and manages
climate-related risks.

Disclose the metrics and targets
used to assess and manage relevant
climate-related risks and opportunities where such information ismaterial.

Recommended Disclosures

Recommended Disclosures

Recommended Disclosures

Recommended Disclosuresa) Describe the board’s oversightof climate-related risks andopportunities.

a) Describe the climate-related risks
and opportunities the organization
has identified over the short,medium, and long term.

a) Describe the organization’s
processes for identifying andassessing climate-related risks.

a) Disclose the metrics used by theorganization to assess climaterelated risks and opportunities
in line with its strategy and risk
management process.

b) Describe management’s rolein assessing and managing
climate-related risks andopportunities.

b) Describe the impact of climaterelated risks and opportunities
on the organization’s businesses,
strategy, and financial planning.
c) Describe the resilience of theorganization’s strategy, taking into
consideration different climaterelated scenarios, including a 2°C
or lower scenario.

b) Describe the organization’s processes for managing climate-related risks.
c) Describe how processes for
identifying, assessing, andanaging climate-related risks areintegrated into the organization’s
overall risk management.

b) Disclose Scope 1, Scope 2, and,if appropriate, Scope 3 greenhouse gas (GHG) emissions,and the related risks.
c) Describe the targets used by
the organization to manage
climate-related risks andopportunities and performanceagainst targets.

Source: Recommendations of the Task Force on Climate-related Financial Disclosures Final Report June 2017.

What is the TCFD?
The Financial Stability Board’s (FSB) Task Force on Climate-related
Financial Disclosures (TCFD) issued a set of recommendations to enable
capital markets to more effectively identify, assess and manage climaterelated risks and opportunities. These recommendations represent
industry best practices for climate-related financial disclosures, help toincrease transparency and lead to market outcomes aligned with theParis Agreement goal of limiting the rise of global average temperatures
to below 2° C.

1.0 Governance
1.1 Board oversight of climate-relatedrisks and opportunities

1.2 Management’s role in assessing and managing
climate-related risks and opportunities

HNRG is governed by the Hancock Natural Resource Group, Inc.
(HNRGI) Board of Directors comprised of the CEO of HNRG,
the President and CEO of Manulife Global Wealth and AssetManagement, the Global Head of Private Markets for Manulife
Investment Management and the Chief Investment Officer ofManulife. HNRG’s Board members collectively execute key
determinations on how both HNRG and Manulife integrate climatechange into their decision-making.

Climate-related risks and opportunities are identified, assessed
and managed across the organization, with HNRG senior
management ensuring they are addressed at the highest level ofthe organization. As one of five pillars of HNRG’s Sustainability
and Responsible Investing (SRI) platform, climate stability is a
strategic priority motivating business decisions to both mitigate
and adapt to climate change. HNRG’s CEO and Board oversee SRI
and receive regular updates from the Executive Committee, which
includes the CEO and the Chief Sustainability Officer (CSO). The
Committee approves significant enterprise-level SRI decisions anddelegates implementation of these responsibilities to the CSO, aswell as to the heads of HNRG’s business areas.

The Board relies on four management committees to support
its work: Conflicts, Ethics, Risk Management, and the Natural
Resource Investment Committee (NRIC). The Risk Management
Committee and the NRIC in particular are integral to addressing
climate change.
The Risk Management Committee:•

Coordinates implementation of an integrated risk management
framework to achieve operational excellence and ensurealignment with best practices.

•Enhances management and Board understanding of HNRG’s
overall risk appetite, as well as enterprise-wide risk management
activities and effectiveness.

•

Reviews HNRG business area risk frameworks, including
climate risks, and provides oversight as to how theseframeworks are applied.

The NRIC reviews, recommends, and oversees investments madeon behalf of all HNRG client accounts, in accordance with accountinvestment policies, procedures and guidelines. This includes
considering relevant climate-related risks and opportunities.
HNRGI Board Oversight

Various internal and external representatives keep the Executive
Committee apprised of climate-related risks and opportunities.
Internally, HNRG’s risk, economic research, operations, andinvestment teams identify climate-related risks and opportunities,
while externally HNRG collaborates on many business initiatives
and with academic institutions focused on mitigating andadapting to climate change, including the World Business Council
for Sustainable Development’s (WBCSD) Forest Solutions Groupand Scaling Positive Agriculture, the MIT Joint Program on the
Science and Policy of Global Change, and the Climate Smart Land
Network.
The CSO also chairs HNRG’s Global SRI Advisory Team, a ninemember detail that gathers intelligence into existing and emerging
sustainability risks and opportunities, coordinating across all
major business functions and geographies to ensure the effective
communication of the risks and opportunities throughout the firm,
including the Executive Committee.

HNRG Sustainability Management

HNRGIBoard of Directors

Conflicts

EthicsRisk
Management

HNRGIBoard of Directors

NaturalResource
Investment
Committee(NRIC)

Executive
Committee
Chief
Sustainability
Officer

Meeting Frequency
As required(min. 1x annually)

As required(min. 1x annually)

At least
quarterly

Bi-monthly

CEO

CFO

CIO

Global SRI
Advisory Team

Chair
CIO

For illustrative purposes only.

For illustrative purposes only.

2020 Climate Disclosure3

2.0 Strategy
2.1 Climate-related risks and opportunities HNRG has
identified over the short, medium, and long term
HNRG is a thematic investment manager, zeroing in on areas
where social or environmental objectives can offer commercial
investment opportunities across timberland and agricultural
assets. When sustainably managed, forests and farms are carbon
sinks—they are two of the most effective forms of natural climate
solutions as they function to remove carbon dioxide from theatmosphere. Leveraging this function is a strategic priority for
HNRG and informs our business planning across multiple time

horizons, with some acquisition target timelines as short as five
years, then ranging from 10 to 30 years for agricultural property
management objectives (depending on crop type and geography)
and up to 50 years or more for timberland.
Climate-related considerations play into our strategy at alllevels—asset, client portfolio, and the organization overall. We
are working to develop a systematic framework for understanding
climate-related risks and opportunities at all these levels, and thetable below outlines those we have currently identified as the most
relevant for our business.

Identified Climate-related Impacts, Risks and Opportunities

Transition

Physical
Chronic

Acute•

Increased frequency, duration and intensity ofdroughts may reduce crop yields and/or increase
the cost of water and irrigation in certain regions.

•

Increased precipitation leading to prolonged or
unusually wet seasons may impact crop planting,harvesting and yields.

•

Changing climatic conditions over the longterm may affect growth rates for different tree
species and/or crops, with those rates potentially
increasing or decreasing depending on specificcircumstances.

•

Changing climatic conditions over the long term
may affect the geography for growing certain
crops, leading to opportunities to expand into
new regions while potentially restricting growth inothers.

•Changing climatic conditions over the long term
may impact pollinator populations in certain
regions, which could reduce crop production.

•

Changing climatic conditions may impact insect
populations, either reducing or increasing
infestations depending on the region, insect, andcrop/tree species.

•

Persistent, extremely warm or cold weather may
impact employee working conditions.

•

Increased wildfire risk and associated casualty/
loss.

•

Increased severe weather, wind, storms, andflooding may lead to casualty/loss.

•

Increased extreme severe weather, extreme heat,and increasingly unpredictable weather patterns
may increase casualty/loss.

•

Increased possibility of pest damage and disease.

MarketPolicy & Legal

Reputational

Technology•

Efforts to mitigate climate change may increase thedemand for and value of carbon removals, creating
new opportunities to develop investment productsthat enhance the carbon removals in forestry andagricultural assets, and/or ecosystem services that
increase resistance to climate change.

•

Growth of carbon markets may increase demandfor carbon offset credits, which HNRG can generate
for clients.

•

Increased demand for renewable energy could
lead to opportunities to develop renewable energy
assets (wind, solar) on client-owned assets.

•

Growing demand for biomass wood-based energy
may increase demand for forestry products andassets.

•Market shifts favoring lower-carbon building
materials may lead to increased use of wood
products in construction, which may drive demand
for forestry assets.

•

New carbon policies may offer opportunities toparticipate in regulated carbon markets in certain
jurisdictions and/or drive demand for carbon
removals in forestry and/or agricultural assets.

•

Increased regulation of land use management
related to water resources in response to changing
climatic conditions may increase operational costs
and impact client returns.

•

A positive reputation for sustainable forestry andagriculture may assist in employee attraction/
retention, as well as support better client relations
and access to capital.

•

Potential criticism of sector for impacts to climate
related to issues such as emissions, water, andland use.

•

Operations in certain jurisdictions could draw
criticism—forest operations, for example, might
mistakenly be linked to fires and deforestation.

•

Technology improvements enable increased
efficiency, including in water and land use.

2020 Climate Disclosure4

2.2 Impacts of climate-related risks and opportunities
on HNRG’s businesses, strategy, and financial planning
We incorporate the anticipated impacts of the climate-relatedrisks and opportunities outlined above into our business strategy
in five key ways:
•
•
•
•
•

Economic research
Diversification
High-quality asset management
Value-added services, andImpact-first investments

Economic Research
HNRG recognizes that formulating strategies to address
climate risk for our clients and the properties we manage forthem requires drawing upon the best science available. To
meet this goal, our Economic Research team has worked withleading academics focused on the interface of climate science,
agriculture, and forestry. We support and participate in an array ofprograms affiliated with university and industry-supported forestry
and agriculture cooperatives. Of note are our sponsorships andcollaboration with the Massachusetts Institute of Technology Joint
Program on the Science and Policy of Global Change, the Marine
Biological Laboratory Ecosystem Center, and the University ofCalifornia, Davis Department of Land, Air, and Water Resources.
The research arising from these partnerships helps us understandthe physical and transition risks and opportunities associated with
forestry and agriculture at a more granular level, informing ouracquisition, property management, and disposition strategies.

Diversification1
HNRG’s core investment philosophy is to leverage the powerof diversification across food and fiber commodity types,
geographies, and management approaches. Already invested in
the major timberland and farmland regions of Australia, Canada,
Chile, New Zealand and the U.S., HNRG continues to expand
globally with an emphasis on large, high-quality timberland
plantations and high-quality permanent and row crop farmland.
Tree species, crop types, weather, water regimes, and markets
vary by region and as a result, returns from different regions are
not highly correlated. Thus, over time, diversified natural resource
portfolios may deliver higher risk-adjusted returns. As climateinduced physical changes shift land arability and climate-relatedtransition impacts influence asset valuations, our diversified
global strategy positions us to leverage emerging growth
opportunities and improve the risk efficiency of an institutional
investor’s real assets program.

High-Quality Asset Management
HNRG conducts extensive due diligence prior to acquiring
any property. We seek to purchase and manage high-quality
timberland and farmland assets that are either less likely
to undergo climate-related shocks and stresses (such as
flood, drought, wildfire, or pests) or that are more likely to beresistant to them. We then manage these assets sustainably byimplementing a stewardship program aligned with third-party
1certification standards in sustainable forestry and farming. Our
integrated business model combines investment management
and property management to align with our clients’ interests andprovide the level of risk management appropriate for long-duration
assets.
Third-party certification helps to ensure that we support thedevelopment, management and operation of working lands for
producing useful products by committing to soil, air and water
quality conservation; biological diversity; wildlife and aquatic
habitat preservation; recreational opportunities; and aesthetics. In
timberland, we have third-party certified 100% of eligible HNRGmanaged forests to sustainability standards advanced by credible
standard-setting organizations. Just as we worked together
with a broad coalition to address sustainability challenges inthe timberland sector, we partnered with colleagues acrossthe agriculture sector to forge a shared standard for farmland
management—the Leading Harvest Farmland Management
Standard. In agriculture, we are committed to managing 100%of our eligible farmland to performance-based, industry-wide
sustainability standards.

Diversification does not guarantee a profit nor protect against loss in any market.

2020 Climate Disclosure

5Value-added Services
HNRG gauges the potential for enhancing the value of theproperties in its portfolio by assessing opportunities for valueadded services—initiating carbon banks, developing ecosystemservices or renewable energy projects, administering recreation
licenses, and negotiating carbon capture and storage (CCS)
agreements, among others. HNRG also actively participates incarbon markets and over the course of its history has sold 6.1
million metric tons of carbon credits. Participating in climatepositive activities that generate secondary revenue streams
differentiates HNRG and enhances returns for investors—it is acore part of our property management strategy.

Impact-first Investment
The most beneficial climate-related opportunity for HNRG iscarbon removal and sequestration. HNRG sees considerable
upside in low-warming scenarios where the government policy
response to climate change begins to price carbon morecomprehensively. Forests and farms are both natural climate
solutions, removing carbon from the atmosphere and storing
it in trees and soils. Traditionally we have managed timberland
and farmland for our investors in order to achieve market-rate
returns, while also generating positive environmental and social
outcomes. We now see the opportunity to manage investments
primarily to remove carbon from the atmosphere, and we plan tooffer “impact-first investments”—investments that optimize andprioritize carbon sequestration.

2.3 Resilience of the organization’s strategy, taking
into consideration different climate-related scenarios,
including a 2°C or lower scenario
HNRG conducted its first qualitative climate-related scenario
analyses in 2020. These analyses examined potential transitionand physical impacts under a high-carbon scenario and a lowcarbon scenario. The transition component of the analysis
used the International Energy Agency (IEA) 2019 World Energy

Outlook (WEO) scenarios, while the physical component used theIntergovernmental Panel on Climate Change (IPCC) Representative
Concentration Pathways (RCP). The high-carbon scenario
accentuated physical impacts with RCP 8.5 and used the IEA WEO
Stated Policies Scenario (STEPS) for transition elements. The lowcarbon scenario accentuated transition-related impacts under the
IEA WEO Sustainable Development Scenario (SDS) and used RCP
4.5 for physical elements.
Comprehensive, portfolio-wide scenario analysis for our farmland
and timberland assets requires accurate, long-term, site-specificdata and sector-specific transition models. Currently, globally
recognized and peer reviewed data for timberland and agriculture
assets is limited. We are exploring ways to obtain or develop
information tailored to sector-relevant scenarios to achieve fuller
results in future years.
Our scenario analysis for this year involved two business casestudies: agriculture in California and timberland in New Zealand.
Both analyses focused on downscaled high-carbon physicalimpacts and low-carbon transition elements. We selected ourCalifornia agriculture assets and New Zealand timber assets
because we believe our asset classes in these regions provide a
reasonable approximation for the breadth of potential climate
scenario impacts on our business until we complete a full
portfolio-wide scenario analysis.
•

These regions represent the highest concentrations of assets
under management per square kilometer for each of our asset
classes.

•

California and New Zealand allowed us to examine scenario
analysis in two different countries (and include both theNorthern and Southern Hemisphere in our assessment).
This provided insights into national, regional, and global
differences particularly relevant for transition scenarios.

•

California agricultural assets allowed us to explore waterrisk under different scenarios, which is among the mostsignificant climate-related impacts facing our agricultural
assets.

Forest fire risk is among the most significant climate-related risksfacing our timberland assets under both high and low carbon
scenarios. This risk is greater in the western US and Australia thanin New Zealand, and we plan to explore this risk in greater detailin future scenario analysis work.
The results of the scenario analysis case studies are found in thetables below, highlighting physical impacts in the high-carbon
scenario and transition impacts in the low-carbon scenario.

2020 Climate Disclosure

6Case Study Scenario Analysis Insights: California Agriculture

High-Carbon Scenario
Physical Impacts

Business Impact

Increased average temperatures (global mean increase of 3.7°C by 2100)•

The impact of warmer winters on bee colonies to be monitored.

•

The greatest potential impact of increased average temperatures is
on chill hours. Increased warming and fewer chill hours may require
moving northward.

•

Risk of smoke-tainted vineyards.

•

Risk of smoke blocking out sunlight and impacting
almond drying rates.

Changes to natural areas and biome shift•

Risk of biome shift is more likely to be felt by the ecosystemsurrounding farmland, rather than directly on the assets. These
impacts would need to be monitored.

Changes in precipitation, water availability and quality•

Crops will require increased amounts of water. Snowpack is an
important natural water reservoir that may become depleted.

•

More intense storms may result in precipitation being washed out
to sea rather than seeping into the ground, thus preventing aquifer
replenishment.

•

Water stress is likely to increase. In severe cases, insufficient water
may require transitioning some assets to areas with more water.

Mean global sea level rise of 0.63 m by 2100•

Little to no impact on current assets; may increase salination of someaquifers. To be monitored.

Transition Impacts

Business Impact

Increased likelihood of regulatory developments affecting water use.

•

Increased wildfire risk•

Increased variability in availability•

Earlier snowpack melt•

Aquifer depletion•

Increased precipitation•

Increase in the intensity of rainfall

Water regulation will likely become prevalent in California over the
coming decades. This may increase operational costs but may alsopresent water banking opportunities.

Low-Carbon Scenario
Transition Impacts

Business Impacts

Carbon pricing•

Risk of higher operational costs from carbon pricing, which may
be passed onto consumers, depending on price pressures (e.g.
substitution-related price ceilings).

•

Opportunity for monetizing soil carbon sequestration as
carbon prices rise.

•

Increased biofuels demand presents opportunity to expand into newcrops and serve a new market.

•

Projected reduction in renewable energy prices could present
opportunity to install on-site microgrids to reduce energy costs.

($100/tC02 by 2030 and $140/tCO2 by 2040 in advanced economies)

Renewable energy (increased deployment, including of bioenergy)Case Study Scenario Analysis Insights: New Zealand Timberland

High-Carbon Scenario
Physical Impacts

Business Impact

Increased average temperatures•

Opportunity for gaining increased share of China’s timber market as
European timber regions may be subject to more extreme climatechanges with attendant impacts on their productivity.

•

Increased average temperatures may extend range for pine to higher
altitudes, should land ownership opportunities become available.

•

Most of HNRG’s New Zealand plantation forests are Radiata pine,which is fairly resilient to biome shift.

•

Risk of heavy rainfall, wind, and cyclones, leading to forest loss
and possible debris wash out.

•

Rising temperatures and sea levels are unlikely to impact
New Zealand Radiata pine.

•

Global mean temperature increase of 3.7°C by 2100•

Higher elevation warming relatively more than lower elevation

Changes to natural areas•

Rise in snowline•

Biome shift

Changes in precipitation and storms•

Increased flood damage•

Increased risk from hurricanes/cyclones

Mean global sea level rise of 0.63 m by 2100

Low-Carbon Scenario
Transition Impacts

Business Impacts

Carbon pricing and growth of the carbon market (increasing carbon pricing
to $100/tCO2 by 2030 and $140/tCO2 by 2040 in advanced economies)•

Higher carbon prices would increase shipping costs, which may beoffset by a projected increase in global demand for lumber.

•

HNRG has monetized most carbon offsets available for its New
Zealand properties and afforestation opportunities are currently
scarce, making generation of new carbon offsets unlikely.

•

Industrial shift toward biofuels may provide an opportunity if demand
for wood pellets increases, although growing fiber demand for newer
uses and in building materials may offer a higher price point.

•

Carbon pricing may increase the costs for fossil fuels, making biofuels
more attractive and potentially an opportunity for HNRG.

•

There is likely little opportunity to provide new renewable energy
capacity due to the New Zealand energy grid’s low emissions profile.

Increased bioenergy (grows to 7% of power generation by 2050)

Renewable energy (increased deployment of wind and solar)

2020 Climate Disclosure

8

3.0 Risk management
3.1 HNRG’s processes for identifying and assessing
climate-related risks
HNRG’s process for identifying and assessing climate-related risks
is grounded in our acquisition due diligence, which we conduct
extensively prior to acquiring any asset. In this process, we adhere
to the United Nations Principles for Responsible Investment (UN
PRI) and the International Finance Corporation’s (IFC) Equator
Principles. We also conduct comprehensive environmental,
biological and social reviews of all targets and require all reviews
to highlight variance from U.S. standards, even when the relevant
local standards are less stringent. Our due diligence processscreens for climate-related risks and opportunities, as identified
in Section 2.1 above. In particular, we appraise physical risks
to an asset (such as drought, flood, wildfire, disease, or pest
infestation), as well as opportunities (potential for cultivating
different or higher-value crops under changing climate conditions).
Our process also involves determining how a property might
be managed to achieve climate-related goals, such as carbon
sequestration or ecosystem preservation.
A major risk for forestry and agriculture is deforestation, asignificant driver of land use-related GHG emissions. HNRG follows
a strict zero-deforestation commitment, and as a signatory to
the 2019 “Investor statement on deforestation and forest fires
in the Amazon”, we fully participate in the global effort to halt
deforestation. HNRG ensures that investments we make do notcontribute, directly or indirectly, to deforestation—we would notencourage, for example, clearing forested areas in anticipationof a land transaction to which we are a party. Our commitment
further aligns with globally accepted biome- and geographyspecific deforestation protocols.

3.2 HNRG’s processes for managing
climate-related risks
By adhering to our core investment philosophy of portfolio
diversification across food and fiber commodity types,
geographies, and management approaches, we are able tomitigate the risk of adverse climate-related physical and transition
impacts. Once an acquisition has been made, the managementof risks and opportunities, including those related to climate aswell as safety, financial, market, and regulatory changes, shifts
to HNRG’s forest and farm property management teams. Bothbusinesses maintain extensive risk frameworks that identify andmonitor risks and put controls in place to manage them. For eachrisk, the framework assesses probability of occurrence, severity,and value potential. The frameworks are maintained by Chief
Operating Officers with input from local operations staff, andwhen the frameworks are updated (on a regular basis), they areadvanced to HNRG’s Risk Management Committee for discussion
and evaluation.
HNRG also manages risk through implementation of a uniform
set of Stewardship Principles. These principles are developed
and reviewed by regional Stewardship Teams as well as HNRG’s

Global Stewardship Team—collectively providing stewardshipguidance. By following this guidance, we manage our properties toindependent sustainability standards, which can then be verified
by a third party to achieve certification.

3.3 HNRG’s processes for identifying, assessing, andmanaging climate-related risks are integrated into theorganization’s overall risk management
HNRG considers climate-related risks and opportunities
fundamental and core to its business, with climate-related risk
management fully integrated into normal risk management
functions—from investment acquisition (through due diligence)and portfolio construction (through diversification) to property
management (through risk frameworks and our Risk Management
Committee).

4.0 Metrics and targets
4.1 Metrics used by HNRG to assess climate-relatedrisks and opportunities in line with its strategy and risk
management process
We use a variety of metrics to measure the success of our climaterelated efforts, beginning with our clients’ risk-adjusted returns,
which provide the most comprehensive measure of our successin managing client assets—including how effective we are atmanaging climate-related risks and opportunities. Ultimately,
our performance against these metrics reflects our fiduciary rolein managing assets according to our investors’ objectives—for
example, the quantity of carbon sequestered on our land isdetermined by how we manage it. We can offer investors theopportunity, through our Impact-first Investment initiative, togive carbon sequestration priority over financial returns, and as
a result sequestration rates for these investors would differ fromrates on properties optimized for financial return.
HNRG prioritizes and incentivizes climate stewardship.
Stewardship performance comprises 20% of annual employee
incentive plan compensation, and is based on third-party
sustainability certification audits, as well as the integration of
ESG considerations into acquisition due diligence (see Section
3.1). While we report on various metrics in our annual SRI report,scientific information on how climate change affects biologicalassets—as well as how these assets impact climate change andour ability to quantify that impact—has historically lagged othersectors due to its complexity. We are, therefore, closely following
discussions in multiple global forums that would provide theguidance needed to more comprehensively assess climate-relatedrisks and opportunities in our asset classes.

4.2 HNRG’s Scope 1, Scope 2, and Scope 3 greenhousegas (GHG) emissions, and the related risks
The table below presents HNRG’s GHG emissions and removals,
by scope, from 2017 to 2019. These results have been preparedbased on the World Resource Institute’s Greenhouse Gas Protocol
Agricultural Guidance, and the IPCC Guidelines for National
Greenhouse Gas Inventory Volume 4—Agriculture, Forestry andOther Land Use. Note that given certain gaps and limitations in
the inventory at present, we do not claim strict conformance tothese standards and guidelines.
Climate Stability

2017

2018

2019

Total scope 1 emissions (MtCO2e)

38 K

38 K

65 K

Total scope 2 emissions (MtCO2e)

17 K

16 K

41 K

Total scope 3 emissions (MtCO2e)

320 K

328 K

426 K

Total GHG removals(MtCO2e, 5-year trailing average)-8.2 M-6.0 M-3.1 M

Source: HNRG. As of December 31, 2019.

New standards for corporate GHG accounting in the land use
sector are currently being developed by the WRI/WBCSD GHG
Protocol. We are actively following these developments and expect
to disclose our GHG emissions based on the new standards
once they’ve been completed. We are also closely following
developing GHG emissions guidance from the Partnership for
Carbon Accounting Financials (PCAF) to ensure that our emissions
metrics are compatible with the standards of financed emissions
quantification methodologies. Harmonizing our measurement
methodologies ensures our clients can realize the benefit offorestry and agricultural asset carbon removals within their own
emissions reporting, based on the same rigorous and globally
recognized standards-aligned emissions quantification approach
we apply in our management operations.

4.3 Targets used by HNRG to manage climate-relatedrisks and opportunities, and performance against
targets
While we await guidance to inform establishing our own
quantitative climate-related targets, we remain committed tothird-party sustainable management certification and have set a
goal to have our GHG inventories third-party verified. We are also
committing to other climate-related measures, including those
relevant to the investment process, as well as the launch of a new
climate-focused investment product designed to enable investors
to meet their own net zero targets. The following are short-termtargets we hope to achieve while awaiting development andfinalization of the guidance and standards required for long-termtarget-setting.
•Continue to offset Scope 1 and 2 GHG emissions from
HNRG office space and Scope 3 emissions from HNRG
employee travel.

•

Third-party verification of material aspects (Scope 1, 2;
direct removals) of GHG inventory by 2021.

•

Third-party verification of all material aspects (including
Scope 3; indirect removals) of GHG inventory by 2022.

•

Completion of SRI scorecard for every acquisition by 2021.

•

Launch carbon sequestration-focused impact investment
product by 2022.
2020 Climate Disclosure

10

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Management may be found at www.manulifeim.com/institutional
Australia: Hancock Natural Resource Group Australasia Pty Limited., Manulife Investment
Management (Hong Kong) Limited. Brazil: Hancock Asset Management Brasil Ltda.
Canada: Manulife Investment Management Limited, Manulife Investment Management
Distributors Inc., Manulife Investment Management (North America) Limited, Manulife
Investment Management Private Markets (Canada) Corp. China: Manulife Overseas
Investment Fund Management (Shanghai) Limited Company. European Economic Area andUnited Kingdom: Manulife Investment Management (Europe) Ltd. which is authorised andregulated by the Financial Conduct Authority, Manulife Investment Management (Ireland)Ltd. which is authorised and regulated by the Central Bank of Ireland Hong Kong: Manulife
Investment Management (Hong Kong) Limited. Indonesia: PT Manulife Aset Manajemen
Indonesia. Japan: Manulife Asset Management (Japan) Limited. Malaysia: Manulife Investment Management (M) Berhad (formerly known as Manulife Asset Management Services
Berhad) 200801033087 (834424-U) Philippines: Manulife Asset Management and Trust
Corporation. Singapore: Manulife Investment Management (Singapore) Pte. Ltd. (Company Registration No. 200709952G) Switzerland: Manulife IM (Switzerland) LLC. Taiwan:
Manulife Investment Management (Taiwan) Co. Ltd. Thailand: Manulife Asset Management(Thailand) Company Limited. United States: John Hancock Investment Management LLC,
Manulife Investment Management (US) LLC, Manulife Investment Management Private
Markets (US) LLC and Hancock Natural Resource Group, Inc. Vietnam: Manulife Investment Fund Management (Vietnam) Company Limited.
No Manulife entity makes any representation that the contents of this presentation areappropriate for use in all locations, or that the transactions, securities, products, instruments or services discussed in this presentation are available or appropriate for sale oruse in all jurisdictions or countries, or by all investors or counterparties. All recipients ofthis presentation are responsible for compliance with applicable laws and regulations.
Any general discussions or opinions contained within this document regarding securities
or market conditions represent the view of either the source cited or Manulife Investment
Management as of the day of writing and are subject to change. There can be no assurance that actual outcomes will match the assumptions or that actual returns will matchany expected returns. The information and/or analysis contained in this material havebeen compiled or arrived at from sources believed to be reliable, but Manulife Investment Management does not make any representation as to their accuracy, correctness,
usefulness or completeness and does not accept liability for any loss arising from the use
hereof or the information and/or analysis contained herein. Information about the portfolio’s holdings, asset allocation, or country diversification is historical and will be subject tofuture change. Neither Manulife Investment Management or its affiliates, nor any of theirdirectors, officers or employees shall assume any liability or responsibility for any direct
or indirect loss or damage or any other consequence of any person acting or not acting inreliance on the information contained herein.
The information in this material may contain projections or other forward-looking statements regarding future events, targets, management discipline or other expectations,and is only as current as of the date indicated. The information in this material including
statements concerning financial market trends, are based on current market conditions,which will fluctuate and may be superseded by subsequent market events or for otherreasons. This material was prepared solely for informational purposes and does notconstitute, and is not intended to constitute, a recommendation, professional advice, anoffer, solicitation or an invitation by or on behalf of Manulife Investment Management or
its affiliates to any person to buy or sell any security or to adopt any investment strategy,
and shall not form the basis of, nor may it accompany nor form part of, any right orcontract to buy or sell any security or to adopt any investment strategy. Nothing in thismaterial constitutes investment, legal, accounting, tax or other advice, or a representationthat any investment or strategy is suitable or appropriate to your individual circumstances, or otherwise constitutes a personal recommendation to you. Manulife Investment
Management or its affiliates does not provide legal or tax advice, and you are encouraged
to consult your own lawyer, accountant, or other advisor before making any financial
decision. Prospective investors should take appropriate professional advice before making
any investment decision. In all cases where historical performance is presented, note thatpast performance is not indicative of future results and you should not rely upon it as thebasis for making an investment decision.

The distribution of the information contained in this presentation may be restricted bylaw and persons who access it are required to comply with any such restrictions. The
contents of this presentation are not intended for distribution to, or use by, any personor entity in any jurisdiction or country where such distribution or use would be contrary
to any applicable laws or regulations. By accepting this material you confirm that you
are aware of the laws in your own jurisdiction relating to the provision and sale of thefunds, portfolios or other investments discussed in this presentation and you warrant andrepresent that you will not pass on or utilize the information contained in the presentation
in a manner that could constitute a breach of such laws by any Manulife entity or any
other person.
Australia: Manulife Investment Management (Hong Kong) Limited (“Manulife IM (HK)”) is
exempt from the requirement to hold an Australian financial services license under the
Corporations Act in respect of the financial services being offered in this material. Manulife IM (HK) is regulated by the Securities and Futures Commission of Hong Kong (“SFC”)
under Hong Kong laws, which differ from Australian laws. This presentation is directed atwholesale investors only.
China: No invitation to offer, or offer for, or sale of any security will be made to the public
in China (which, for the purposes of this paragraph, does not include the Hong Kong or
Macau Special Administrative Regions or Taiwan) or by any means that would be deemed
public under the laws of China. The offering document of the subject fund(s) has not been
submitted to or approved by the China Securities Regulatory Commission or other relevant governmental authorities in China. Securities may only be offered or sold to Chinese
investors that are authorized to buy and sell securities denominated in foreign exchange.
Prospective investors resident in China are responsible for obtaining all relevant approvals
from the Chinese government authorities, including but not limited to the State Administration of Foreign Exchange, before investing.
Hong Kong: This material is provided to Professional Investors [as defined in the Hong
Kong Securities and Futures Ordinance and the Securities and Futures (Professional
Investor) Rules] in Hong Kong only. It is not intended for and should not be distributed to,or relied upon, by members of the public or retail investors. This material has not beenreviewed by the Securities and Futures Commission (SFC).
Malaysia: This material was prepared solely for information purposes and is not an offer orsolicitation by anyone in any jurisdictions or to any person to whom it is unlawful to makesuch an offer or solicitation.
Singapore: This material is intended for Accredited Investors and Institutional Investors as
defined in the Securities and Futures Act.
South Korea: This material is intended for Qualified Professional Investors under the Financial Investment Services and Capital Market Act (“FSCMA”). Manulife Investment Management does not make any representation with respect to the eligibility of any recipient ofthese materials to acquire any interest in any security under the laws of Korea, including,
without limitation, the Foreign Exchange Transaction Act and Regulations thereunder. An
interest may not be offered, sold or delivered directly or indirectly, or offered, sold ordelivered to any person for re-offering or resale, directly or indirectly, in Korea or to any
resident of Korea, except in compliance with the FSCMA and any other applicable laws
and regulations. The term “resident of Korea” means any natural person having his placeof domicile or residence in Korea, or any corporation or other entity organized under thelaws of Korea or having its main office in Korea.
Switzerland: This presentation may be made available only to Qualified Investors as
defined in the Swiss Collective Investment Schemes Act of 23 June 2006 (as amended).
European Economic Area and United Kingdom: The data and information presented is directed solely at persons who are Professional Investors in accordance with the Markets in
Financial Instruments Directive (2004/39/EC) as transposed into the relevant jurisdiction.
Further, the information and data presented does not constitute, and is not intended toconstitute, “marketing” as defined in the Alternative Investment Fund Managers Directive.
United States: Manulife Investment Management (US) LLC (“Manulife IM US”) andManulife Investment Management (North America) Limited (“Manulife IM NA”) are indirect
wholly owned subsidiaries of Manulife. Manulife IM (US) and certain of our affiliatedregistered investment adviser firms may market and provide investment management oradvisory services, under the brand name “John Hancock Investment Management”. Thisis a brand name only, not an entity separate from Manulife IM (US). This material is notintended to be, nor shall it be interpreted or construed as, a recommendation or providing
advice, impartial or otherwise. Manulife IM US, Manulife IM NA, Manulife Investment
Management Private Markets (US) LLC, and Hancock Natural Resource Group, Inc. andtheir representatives and/or affiliates may receive compensation derived from the sale of
and/or from any investment made in its products and services.
5273082020 Climate Disclosure

11About Hancock Natural Resource Group, Inc.
Hancock Natural Resource Group, Inc. is a registeredinvestment adviser and part of Manulife Investment
Management’s Private Markets platform. We specialize inglobal farmland and timberland portfolio development andmanagement on behalf of our investors worldwide. Our
timber division manages approximately 5.4 million acres oftimberland across the United States and in Canada, New
Zealand, Australia, and Chile. Our agricultural investmentgroup oversees approximately 470,000 acres of prime
farmland in major agricultural regions of the United Statesand in Canada and Australia.

About Manulife Investment Management
Manulife Investment Management is the global wealthand asset management segment of Manulife Financial
Corporation. We draw on more than 150 years of financial
stewardship to partner with clients across our institutional,
retail, and retirement businesses globally. Our specialist
approach to money management includes the highly
differentiated strategies of our fixed-income, specialized
equity, multi-asset solutions, and private markets teams.

Every photo in this report was taken by an employee or contractor on or nearproperties we manage. We take tremendous pride in our work, and we’ve
decided to share some of that passion with you.

197 Clarendon St.
Boston, MA 02116-5010
USA
www.hnrg.com