Climate change
statement
December 2020

Climate change statement

At Manulife Investment Management, we believe that climate change is a systemic risk that may
have an imminent and potentially irreversible impact on the global economy, capital markets,and society at large. These impacts will manifest as both risks and opportunities for almost allcompanies in all industries and therefore must be properly assessed by investors in order tosafeguard clients’ assets.
The principles herein align with those of Manulife Financial Corporation (MFC), our parent
company, and this statement outlines our approach to the investment and asset ownershipissues we face now and into the future. We are supporters of the Investor Agenda on Climate
Change,1 which informs this statement.

Climate change in context
Climate change is a shift in temperature and precipitation levels, and an increase in extreme
weather, due to elevated levels of greenhouse gases (GHGs) in the atmosphere.2 The burning offossil fuels for energy for power generation, heat, transportation, and manufacturing is thelargest emitter of GHGs.3 Agricultural and land use changes, such as deforestation, andindustrial processes are other significant sources of GHG emissions.
According to the October 2018 report of the Intergovernmental Panel on Climate Change(IPCC),4 limiting warming to 1.5° C (2.7° F) above preindustrial levels would require rapid,
far-reaching, and unprecedented action at all levels of society. The report states that thecurrent impact of global warming can be observed on human and natural systems, and thatmany land and ocean ecosystems have already materially changed. Development pathways
compatible with 1.5° C of warming with no or limited temperature overshoot requires
unprecedented and urgent transitions in energy systems, land use, urban development,
infrastructure, industrial systems, and consumer behavior. According to the IPCC, world
economies must invest an average of US$2.4 trillion a year for the next two decades,
representing about 2.5% of global GDP, to avoid irreparable damage from climate change.

The Paris Agreement
At the December 2015 United Nations Climate Change Conference in Paris, all 197 participating
parties reached a landmark agreement to reduce GHG emissions (the Paris Agreement).5 The
accord represented the most ambitious global agreement to date to address climate change, withits main goal being to prevent the average global temperature from rising more than 2° C degrees(3.6° F) above preindustrial levels. The Paris Agreement has been ratified by 189 parties,6 and it
is widely expected to result in a wave of policies and regulations globally over the coming years
aimed at reducing carbon emissions or equivalent GHGs.

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Climate change statement

Defining climate risk
According to the Task Force on Climate-related Financial
Disclosures (TCFD) final recommendations released in 2017,7
climate-related risks relevant to investors can be classified asphysical (associated with changes in chronic or acute weather
patterns) and transition (impacts resulting from the transition
to a low-carbon economy, including policy, legal, technology,
and market changes to address mitigation and adaptation
requirements) risks. Examples of how physical and transition
risks can materialize for companies include:•	Direct regulatory costs for companies with Scope 18
carbon-intensive business activities•	Operational disruptions from extreme weather events thatare more unpredictable or impactful• Disruptions to upstream and downstream supply chain•	Sustainable agriculture—services, products, seed technology,
irrigation, crop protection•	Infrastructure investment—green buildings, sanitation,
electrification of remote areas, smart grids, alternative clean
energy, energy storage, digitalization, transportation, financing•	Preservation of natural capital—water technologies,
biodiversity, sustainable mining technologies•	Sustainable forestry—forest offsets, voluntary carbon
markets, improved forest management, reforestation, highcarbon stocks•	Circular economy—reduction of plastics, biodegradable
packaging, mineral recycling from batteries and devices•	Clean air—reduction of GHG emissions, carbon extraction,
methane recapture, carbon capture sequestration•	A shift in market access or end user demand forindustries that sell carbon-intensive products (i.e., highScope 38 emissions), as customers or regulators shift togreener substitutes

Our approach to climatechange in investing•	Stranding of company assets, either due to GHG regulations,rapid technology switching, or physical risks (chronic and acute)The opportunities of climate change
The TCFD framework also emphasizes that efforts to mitigate andadapt to climate change also produce opportunities forcompanies, industries, and investors. Examples include resource
efficiency and cost savings, the adoption of low-emission energy
sources, the development of new products and services, access to
new markets, and building supply chain resilience. Climate-related
opportunities will vary depending on the region, market, andindustry in which an organization operates. The following is a
non-exhaustive list of growth themes that will emerge, some ofwhich we have direct exposure to today:

To understand the impact of climate change on investment
decisions, asset managers should assess the transition risk,
physical risk, and opportunities posed by climate change to thecompanies in which they are invested. We recognize that climatechange could have an economic impact, which will vary fromcompany to company. The varying degree will depend on the
exposure level of each sector, industry, and geography. We
believe that the understanding of climate change across thecapital markets remains varied, leading to potential mispricing ofassets, and that many companies may be inadequately prepared
to respond to the risks and opportunities of this transition.
We may take a variety of actions toward managing climaterelated risks and opportunities across our businesses andinvestments to appropriately price climate risk. Broadly

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Climate change statementsummarized, our available actions relate to

Climate change in ourasset allocation and selection, investment

investment process

analysis and research, proxy voting, mitigating
direct GHG emissions, deploying sustainability
management best practices for operated
assets, and participating in collaborative
industry climate initiatives. In general, ourpreferred position is to engage directly withcompanies to encourage effective
implementation of climate risk mitigation andadaptation strategies, reserving the right todivest of any investment.

GovernanceOur climate-related activities take place
within a governance framework establishedby Manulife Investment Management tooversee the sustainable investing activities
and support the implementation of thesustainable investing statement in alignment
with the firm’s overall strategy and businesspriorities. This structure comprises various
committees and working groups across asset
classes at appropriate levels of the firm withrepresentation from various business
functions that are stakeholders in
implementing the sustainable investing
agenda. The heads of the public markets andprivate markets businesses chair theirrespective sustainable investing committee,
which enables regular decision-making
oversight of the sustainable and responsible
investing agenda that is appropriate tospecific asset classes. In turn, chairs ofthese sustainable investment committees
communicate directly to other leaders of the
global wealth and asset division of MFC.

Our goal to achieve attractive risk-adjusted
returns remains consistent as we aspire tointegrate environmental, social, andgovernance (ESG) factors, including climaterelated factors, throughout our due diligenceand investment decision-making processes.
Our integration process focuses on defining
climate risks and opportunities at the asset
level, factoring in the differences between
industries, geographies, and operating
models, with the objective of ensuring
portfolio resiliency over the long term. In someasset classes, we seek opportunities toleverage growth potential derived from theclimate transition.
As climate science is evolving, so too is ourapproach to integrate climate-related
considerations into the investment process.
Our approach is informed by industry initiatives,
available information, and the understandingthat perfect data is nonexistent. Some of these
considerations include:•	We aim to develop differentiated analyticaltechniques to assess climate-related risks
and opportunities both in public andprivate markets consistent with the typesof assets and the ownership and operating
structures across asset classes.
•	We are gradually incorporating transitionand physical risk data to assess climate
risks and opportunities. We look to leverage
third-party data and tools that assist in
identification of regions or industries highly

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Climate change statement

exposed to climate-related risks and assess the alignment ofthese exposures with our business strategy.
•	As science evolves and different tools and resources aredeveloped, continuous education of our investment teams isa cornerstone of our approach to climate change. We also
strive for ongoing dialogue and content dissemination forour investors to keep them informed regarding the latest
facts and understandings.
•	We recognize the value of scenario analysis as a tool toassess a potential range of future outcomes and impacts
associated with climate change. When appropriate data
and tools become available, we are committed to runningclimate scenario analysis for all asset classes. As acomponent of fundamental analysis, we will review
scenario analysis completed by companies we invest in orfor individual assets if available; otherwise, we willencourage companies to complete the beneficial exercise

ESG factors with the intention of protecting our clients’investments; to influence the adoption of positive change in acompany’s disclosure, management strength, and strategic
approach to key ESG issues; and we seek to further define
measures of best practice of climate risk management. Since
2018, climate risks and the climate transition have been a focus
topic in many of our bilateral engagement discussions withcompanies, which is complemented by our participation in
engagement initiatives such as the Climate Action 100+. By
engaging with companies on climate change transition, we
encourage them to align their business strategy with the long-term
interests of investors to support their preparation for the energy
and economic transition ahead. Specifically, we support
companies to align their business strategy with climate science,
proactively manage and disclose GHG emissions, and makedisclosures in line with the TCFD recommendations or similar
disclosure frameworks. As stated in our Manulife Investment
Management global proxy voting policies, we actively vote toencourage best practices by companies toward environmental
risks and opportunities.

of scenario analysis.
The effectiveness of these activities relies on the quality andavailability of data from companies, managers, and assets. We
endorse the TCFD recommendations and we believe that awider adoption of this framework will enhance our ability toprovide a reasonable assessment of investment risks.
We recognize that the transition to the low-carbon economy

Asset operations
In segments where we operate assets, climate-related
considerations inform our mitigation and adaptation efforts to
reduce the impact and vulnerability of our assets. We havedeveloped practices to measure and reduce our emissions andwe have implemented third-party certification standards toenhance our reporting and accountability commitments.

creates investment opportunities and we embrace changes totechnologies, protocols, and financial instruments arising from
efforts to achieve carbon neutrality. Our investment teams lookto identify opportunities to invest and engage in low-carbon
solutions, including renewable energy, real estate compliant
with green building certifications, natural climate solutions,
global carbon markets, and green bonds.

Active ownership
In line with our Manulife Investment Management ESG
engagement policy, in public markets investing we engage on

Climate collaborations withregulators and otherstakeholders
Governments are significant influencers in the adoption of cleaner
forms of energy, either through regulatory reforms or marketbased programs to promote the transition to a lower carbon
emissions environment. Through a variety of mechanisms, we
engage with policy makers and regulators on systemic climate

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risks given the potential for these risks to disrupt functioning capital markets. Our climate policy
engagement priorities include:•	
Carbon pricing: We support effective carbon pricing policies that drive emission
reductions and industry innovation while seeking to lower compliance costs. In our view,well-designed policies introduce flexibility through market-based mechanisms that provide
emitters with choices on how to comply. Further, complementary policies should beconsidered to remove barriers that hinder companies’ ability to reduce their emissions
with new technologies or processes. We support carbon policies that provide clear
incentives over the long term, are in line with the goals of the Paris Agreement, that aretransparent, easy to understand, and can be consistently implemented, enforced, andmaintained over time. We support carbon pricing coverage that is broad when necessaryand equitable across sectors.
•	Disclosure: We support regulatory efforts to ensure appropriate, decision-useful, andindustry-specific climate disclosures, and endorse the structure of the TCFD
recommendations as a broad framework for these efforts.
•	
Subsidies: We are supportive of governments’ actions to create policies that address
climate change in a sound economic manner.
•	
A just climate transition: We recognize the world’s carbon transition will create disruptionof certain communities and believe a just transition plan is appropriate in tandem with clean
energy adoption. We believe all stakeholders should be proactive and create plans to ensurea fair transition to the low-carbon economy for affected communities.
We support carbon policies that have clear mechanisms for periodic review, improvement,
and termination, while attempting to be cognizant of programs that facilitate carbon leakage
to the detriment of another region or country.
We also place a strong emphasis on collaboration with industry peers, industry associations,civil society organizations, and other groups that are working toward a more climate-resilient
capital market and economy. These collaborations may include sponsoring climate research,creation of new industry standards or reporting frameworks, joining collaborative industry
engagements or innovation initiatives, joining industry working groups, and signing joint
letters. We will collaborate with other industry stakeholders where we believe the initiative iscredible, can amplify the impact of our climate work, and is in the long-term interests of ourclients and the investment industry.

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Climate change statement

Reporting
As an investment firm, we are supportive of therecommendations of the TCFD and we are committed toincrementally report in line with its guidance for the various
asset classes in which we are invested.

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1 The Investor Agenda has been developed for the global investor community to accelerate and scale up the actions that are critical to tackling climate change andachieving the goals of the Paris Agreement with the aim of keeping average global temperature rise to no more than 1.5 degrees Celsius. https://theinvestoragenda.
org/. 2 United Nations Framework Convention on Climate Change, https://unfccc.int/files/press/backgrounders/application/pdf/press_factsh_science.pdf. 3
Center for Climate and Center for Solutions, Global Emissions, https://www.c2es.org/content/international-emissions/ 4 See the IPCC’s October 2018 special
report on the impacts of global warming, https://www.ipcc.ch/sr15/. 5 The Paris Agreement, https://unfccc.int/process-and-meetings/the-paris-agreement/theparis-agreement. 6 As of 4/1/20, Paris Agreement Status of Ratification, https://unfccc.int/process/the-paris-agreement/status-of-ratification. 7 Recommendationsof the Task Force on Climate-related Financial Disclosures. 8 Greenhouse gas (GHG) emissions scope level definitions: Scope 1: all direct GHG emissions; Scope 2:
indirect GHG emissions from consumption of purchased electricity, heat, or steam; Scope 3: indirect emissions not covered in Scope 2 that occur in the value chainof the reporting company, including both upstream and downstream emissions. See also “The Greenhouse Gas Protocol: A Corporate Accounting and ReportingStandard (Revised Edition),” World Resources Institute and World Business Council for Sustainable Development, March 2004.

8 of 9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 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—along with access to specialized, unaffiliated asset managers from around the world through ourmultimanager model.
These materials have not been reviewed by, are not registered with any securities or other regulatory authority, andmay, where appropriate, be distributed by the following Manulife entities in their respective jurisdictions. Additional
information about Manulife Investment Management may be found at www.manulifeim.com/institutional
Australia: Hancock Natural Resource Group Australasia Pty Limited., Manulife Investment Management (HongKong) 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 and United Kingdom: Manulife
Investment Management (Europe) Ltd. which is authorised and regulated 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 Investment 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) South Korea: Manulife
Investment Management (Hong Kong) Limited. Switzerland: Manulife IM (Switzerland) LLC. Taiwan: Manulife
Investment Management (Taiwan) Co. Ltd. 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.
Manulife Investment Management, the Stylized M Design, and Manulife Investment Management & Stylized M Design
are trademarks of The Manufacturers Life Insurance Company and are used by it, and by its affiliates under license.

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