Naturestatement
November 2022

As part of our commitment to helping
our clients achieve their objectives andbuild resilient portfolios, we at Manulife
Investment Management1 are committed
to positively affecting nature andbiodiversity through our business andinvestment activities.
We aim to proactively assess and manage nature-related risks
and opportunities across our investments, as we understandhow essential nature is for the future success of businesses,
the economy, and society. This statement outlines the valueof nature and biodiversity and our approach to nature in theinvestment process and asset stewardship.

Key definitions
Biodiversity: The variety of life on earth—typically ameasure of the variation at the genetic, species, andecosystem levels. Biodiversity is a characteristic ofhealthy natural capital assets and underpins nature’s
capacity to generate flows of ecosystem services,such as how birds, insects, and other animals
pollinate our crops
Ecosystem services: Benefits that people
obtain from natural capital such as air and water
purification services, also known as nature’s
contributions to people
Natural capital: Stocks of renewable andnonrenewable resources that combine to yield aflow of benefits to people
Nature loss: Decline of natural capital, ecosystemservices, or biodiversity
Produced capital: Consists of physical assets
generated by applying human productive activities
to natural capital and capable of providing a flow ofgoods or services

We invest in a global economy
dependent on nature
Nature is, quite simply, the natural world. It includes bothnonliving realms (land, soil, water, air) and living ones
(ecosystems, species, and genes), which we refer to as
biodiversity. In addition to nature’s tremendous inherent value,
all life on earth, to varying degrees, depends on the benefits
nature provides. Nature and biodiversity are critical for thefunctioning of society and the global economy. Over half
the world’s total GDP—about $44 trillion of economic value
generation—is moderately or highly dependent on nature andits services.
Yet the current trajectory for the use and management of natural
capital isn’t sustainable. As outlined in the Dasgupta Review, aseminal global review of the economics of biodiversity, economic
and technological advancement has come at a devastating costto nature. Estimates indicate that between 1992 and 2014,
produced capital per person doubled, but the stock of natural
capital per person declined by nearly 40%. The gap between
the rate of natural capital consumption and nature’s ability toregenerate continues to widen: One estimate from the Global
Footprint Network (GFN) is that the ratio of our demand from thebiosphere to its regeneration rate increased from 1 in the late1960s to 1.6 in 2020.

Consideration of nature in
investment decision-making
Companies can interact with nature in two ways: through theirbusiness models, which may depend on natural capital inputs,
and through their operational impact on the natural world. For
example, a food or beverage company depends on natural
capital such as water, soil quality, and pollinators to maintaina reliable supply of agriculture inputs for its products. On theother hand, the company may affect biodiversity and nature
through its land use, greenhouse gas emissions, sourcing
activities, and the agriculture practices of its suppliers.
Businesses should consider the importance of nature to theiroperations by evaluating their potential to reverse the negative
impacts of their operations on nature and, where possible,

1 Manulife Investment Management is the unified global brand for Manulife’s global wealth and asset management business, which serves individual investors
and institutional clients in three businesses: retirement, retail, and institutional asset management (public and private markets). This statement applies to theinstitutional asset management business of Manulife Investment Management.

Nature statement—November 20222

positively contributing to restoring it. We believe companies that
better manage natural resources and environmental impacts
from operations can offer investors a better risk/reward profile
over the long term as nature-related risks begin to manifest
both physically and financially. On the contrary, businesses
that fail to account for their relationship with nature could face
several negative consequences. Examples include a lack of raw
materials that leads to revenue reduction, severe supply chain
disruption due to extreme weather events, product substitution,and loss of market share due to consumer appetite changing
toward more sustainable products and business culture.

Companies have largely not been charged for their consumptionof natural capital; using the resources that nature provides has
been free, leading to the degradation of global natural capitalstocks due to overconsumption. As society begins to realize theimpacts of the overexploitation of natural capital, businesses
may face a variety of financial risks as society explores
mechanisms to discourage unsustainable consumption.

An overview of nature-related risks and how businesses may be affected
Type of Risk

How risk materializes

Impact on companies

Physical risk

Leads to the decline of:

Ecosystem services at risk due to:• Air quality• Water security and quality• Land productivity• Soil health• Pollinator health• Habitat intactness• Decreased food and raw material production• Supply chain disruption• Raw material price volatility• Reduced land value and stranded assets• Capital destruction• Loss of revenues• Pollution• Invasive species• Climate change• Overexploitation of natural resources• Land and sea use change

Transition risk
Resulting from societal response tonature loss

Liability and reputational risk

Nature statement—November 2022

• New policy and regulation• Technological obsolescence• Adaptation of business operations• Shift in consumer and investor
preferences toward nature-positive
products/business models• New purchaser requirements• Limits on investment activities• Additional reporting requirements• Investment in new technologies or products• Higher operating costs and/or loss of revenues• Stranded assets• Shifts in capital allocation• Litigation• Payouts and fines• Insurance costs• Reputational damage• Negative consumer or investor sentiment• Loss of market share/revenues• Ratings downgrade and/or share price losses• Loss of licenses to operate or develop

3Our approach to nature in the investment process
Our investments intersect with nature along the axes of manydifferent material issues. Examples include water security,
water quality, deforestation, land use change, air and waterpollution, commodity production, and the circular economy.
As scientific understanding of the natural world, policy, anddata evolves, so too will our approach to integrating naturerelated considerations into the investment process. We aim toconsider natural capital and natural capital management in ourinvestment decision-making. We do so by making use of current
data sources and learning from industry initiatives, with theunderstanding that available data, and the science behind it, isconstantly improving and evolving in this area. We strive to adopt
sound practices in natural capital management where we directly
operate assets, and we encourage such adoption by third parties
and securities issuers when applicable.
The approach we take to nature and biodiversity is calibrated
to the asset class we’re investing in, the degree of control wehave over the assets, and the materiality of issues given otherfactors such as geography, sector, and ecosystems.

Asset type

Strategy

Approach

ExamplesReal estate,timber, andagriculture

Where we serve as bothinvestment managers andoperators of our clients’timber, agriculture, andreal estate assets, we’re
responsible for making
the day-to-day decisions
on how to operate theassets.

• Sustainable land
management
and operations

Our zero-deforestation policy commits us to not engage in deforestation,either directly or indirectly; for example, through purchasing recently
deforested land.

• Habitat
conservation andprotection

Within our real estate investments, we look to support the preservation ofgreen space and restoration of biodiverse habitats within the communities
in which we operate. We use a variety of strategies for mitigating biodiversity
loss, including limiting the use of chemical pest controls, operating green
rooftop environments with native plant species and urban vegetablegardens, maintaining beehives, and protecting the environment for birds.

Infrastructure,
private equity,and private
creditAs we’re typically minority
investors, and rarely holdboard seats, we consider
our impact on nature in
our initial due diligence.

Environmental,social, andgovernance (ESG)
due diligence
tools incorporate
biodiversity data

We’ve added biodiversity questions to our due diligence process when
considered to be material to an investment. Before investing in an
infrastructure project, we’ll assess the impact the asset may have on
endangered species; for example, in one of our infrastructure investments,
a threatened and endangered species protection plan was implemented.

Public equity
and fixed
incomeWe may take a variety ofactions toward managing
nature-related risks andopportunities, including
asset allocation andselection, investment
analysis and research,and stewardship
activities.

• Proprietary
ESG models
incorporating
biodiversity data

Our investment teams have access to a variety of tools, frameworks, andmodels to assess their portfolio’s impact on nature.

• Biodiversity data
sets and tools

Our proprietary ESG industry handbooks and materiality maps capture
sector-specific material ESG issues, including nature-related issues suchas climate change, exploitation of natural resources, and pollution.
Our proprietary sustainability impact and sustainability best-practices
models identify best-in-class issuers through capturing and analyzing
sector-specific sustainability metrics. These models help identify bothnature-related risks and opportunities to which issuers may be exposed.
We work with investment teams to build custom monitoring tools for thematerial issues within their portfolios. Examples include monitoring naturerisks, such as land or ecosystem disturbances, or companies operatingin biodiverse-sensitive and/or water stressed areas. This process informs
engagement opportunities where teams can focus on issuers that perform
poorly in these areas.
Our sovereign ESG risk model, used by our fixed-income investment
teams, captures nature-related risks of sovereign issuers, including water
management, levels of pollution, and rates of mineral and forest depletion.

Nature statement—November 2022

4

Our approach to nature in asset stewardship
Our consideration of nature goes beyond the initial investment
process to our stewardship responsibilities and, where we
directly operate assets, management practices. Similar to theinvestment process, our approach is calibrated to the asset
class and degree of control we have over the asset.
Where we operate private assets, we have specific guidelinesthat we follow in relation to nature and biodiversity. We
actively manage our direct-operate timberland and agriculture
investments according to the region-specific best practices
recommended by third-party sustainability certification. These
best practices encourage biodiversity and protect threatened
and endangered species, as monitored by our operations andsubject matter expert teams and through third-party research
partnerships. We increase our positive nature impacts bycollaborating with local land trusts, national and international
nonprofits, and national and international biodiversity
initiatives (e.g., the Nature Conservancy, NatureServe). For
example, our operations staff and corporate leadership were
instrumental in the creation of the world’s first third-party
sustainability certification for agriculture, Leading Harvest,
and our entire U.S. agriculture platform now collects evidenceof its biodiversity-promoting best practices, which are part of
Leading Harvest audits.2
In real estate, our group’s proprietary Sustainable BuildingStandards provide guidance to property managers on material
ESG initiatives such as energy, water, waste, and greenhousegas management. Standards focused on responsible
contracting and sustainable procurement support the selectionof products that help reduce the impacts on nature associatedwith manufacturing, transportation, use, and disposal ofmaterials. These procurement standards provide guidance on
sourcing recycled content, rapidly renewable material, or using
third-party certifications. Standards focused on tenant andcommunity engagement also support nature and biodiversity
through the promotion of initiatives such as urban beekeeping
and vegetable gardens at the property level.
Where we don’t operate private assets, we conduct stewardship
activities by building meaningful partnerships with leading
operators and sponsors. Once we invest, our team works tomaintain a close relationship with the management teams ofcompanies and our investment partners to continue monitoringmaterial aspects of the investment, including nature andbiodiversity factors.

For public corporate issuers, we expect management teams
to consider the impacts of operations and products on thenatural world with an eye toward achieving operations that use
natural capital in a sustainable manner. For example, we may
engage mining companies on rehabilitation of used land fromoperations when they’ve closed tailings dams or mines. We
primarily use direct engagement with management teams anddirectors, collaborative engagement, and, where applicable,
proxy voting to encourage adoption of best practices anditeration toward sustainable use of natural capital.
• Engagement—We engage with management teams regarding
biodiversity, air quality, waste management, water management,
sourcing practices, product lifecycle, and other sustainability
factors related to nature. We have these conversations as partof our general monitoring and due diligence activities on behalfof our portfolios. We also may engage with a management teamto request adoption of certain best practices and reporting
related to management of natural capital to improve the risk/
return profile of that investment.
• Proxy voting—Where we believe nature and biodiversity
present a material risk or opportunity for an issuer, Manulife
Investment Management may express an opinion on anissuer’s oversight of those risks and opportunities throughexercise of proxy votes. This can include, for example, support
for shareholder resolutions, including, where we believe
appropriate, proposals to provide more information on water
efficiency, efforts to curb deforestation, programs on limiting
pollutants, supply chain and sourcing practices, and productlifecycle management.
In situations where we identify a material board failure
resulting in significant harm to, or mismanagement of, natureand biodiversity, we may voice our concern by voting against
responsible directors. As a limited set of examples, we may voteagainst directors where board negligence results in a massive
spill of hazardous waste, the illegal trafficking or poaching of
wildlife, or a fire that causes significant loss of timberland.
We also may vote against directors where we engaged andrequested certain changes of management over a reasonable
timeframe and found them unresponsive.

2 Oliver Williams, global head of agriculture, is current chair of the Board of Directors for Leading Harvest. For more information on Leading Harvest, please seeleadingharvest.org/about.

Nature statement—November 20225

Collaborations with stakeholders on nature
Beyond our asset stewardship/management, unilateralengagement, and proxy voting activities, we also collaborate
with other investors, standard setters, and policy makers toencourage best practices in natural capital and biodiversity
reporting and management. We participate in various naturerelated initiatives, including:• Taskforce on Nature-related Financial Disclosures(TNFD)—As a member of the TNFD Forum, we support thedevelopment of a risk management and disclosure frameworkfor nature-related risks.
• Finance for Biodiversity Pledge and Foundation—We’resignatories to the pledge and members of the foundation,
where we sit on the advisory board and working groups(engagement, public policy, impact assessment, target
setting) committed to developing best practices aroundassessing impact, both positive and negative, on biodiversity
and creation of targets to increase significant positive
impacts on biodiversity.

We aim to monitor these industry groups, as well as new
industry groups, to further inform our process and thefuture development of metrics and targets. We may alsojoin collaborative engagement efforts where investors group
together to engage with a specific management team.
We also know that positive outcomes come not only fromprivate action, but from responsible government policy aimed
at protecting our natural systems. Through collaborative
groups, we therefore work to encourage development ofgovernment policy that works toward sustainable economic
growth, and we advocate for policies that protect and restore
biodiversity with an emphasis on aligning financial flows with
global biodiversity goals.

• World Business Council for Sustainable Development(WBCSD)—As a member of the WBCSD, we collaborate
with other organizations to advance sustainable businessdevelopment and are involved in the Nature Action and
Scaling Positive Agriculture programs and the Forest
Solution Group.

Nature statement—November 2022

6

A widespread health crisis such as a global pandemic could cause substantial market volatility, exchange-trading suspensions and closures, and affect portfolio
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