Driving positive change

• Avoid negative impact by actively excluding controversial sectors (i.e. alcohol, tobacco, gaming, adult entertainment, thermal coal involvement, and weapons), organisations and UN Compact (opens in a new tab) violators.
   

Industry breakdown (%) of Manulife Sustainable Asia Bond Strategy

• Fully incorporate ESG factors into our market assessments, top-down forecasts, bottom-up research and risk management.
• ESG scorecards are used to increase transparency on how our credit analysts capture ESG risks (and quantify risks) when assessing a company’s credit worthiness.

Illustration of Manulife IM Asian credit issuers’ ESG scorecard 

• Under a comprehensive ESG framework, Manulife IM Asia Credit Committee conducts deeper analysis to identify leading, best-in-class6 issuers with lower ESG risks, solid track records and forward-looking stances.
• 42 issuers of the JESG JACI universe were rejected due to ESG concerns.

Asian credits are screened using a comprehensive ESG framework 

_{For illustrative purposes only.}

_{Source: Manulife Investment Management, JPMorgan ESG Asia Credit Index (JESG JACI), as of 31 December 2021. * The figure 239 reflects the number of Asian credit issuers approved by Manulife IM Asia Credit Committee.}

• Committed to being a “true-to-label” ESG fixed-income strategy.
• Minimum 10% (currently 33%7, the rest are select issuers with strong sustainable attributes and aiming to outperform traditional Asian bond peers) exposure to ESG themed bond that are dedicated to environmental, social and/or sustainability projects.
• Support market innovation in new KPI-linked, transition, and blue bonds.

Manulife sustainable Asia Bond Strategy’s ESG bond exposure since September 2020 

_{Source: Manulife Investment Management, as of 30 November 2021.}

Why we engage:
 

• Value creation: Engage with companies that are outcome-oriented to support long-term returns and mitigate risks.
• Due diligence: Evaluate ESG factors to form better investment decisions and insights into company’s management and performance.
   

Stewardship
 

• Collaborate with industry and regulatory groups to support long-term interests of our clients’ capital and resilient capital markets.
   

How we engage:
 

• Engage with all strategy companies at least once a year.
• A “milestone system” to measure progress in company engagements.
• Collaborate in industry initiatives such as Climate Action 100+ and UN PRI working groups.
   

I. Climate change mitigation

• Target a minimum 15% exposure to dedicated “green” bonds that are best-in-class6.
• Engage with companies working towards a low carbon transition.

Environmental theme: provision of clean energy and low carbon emissions to mitigate climate change

Carbon intensity
(Tons CO2e / $M revenues)* 

Source: Manulife Investment Management, as of 30 November 2021.

II. Aging population support

• Aim to maintain an overweight exposure to dedicated “social” bonds.
• Identify best-in-class6 companies that provide solutions for an aging population and the demographic shift.

Social theme: the provision of retirement solutions to Asia’s aging population

Companies offering retirement solutions
(% Exposure) 

Source: Bloomberg, JPMorgan indices, Manulife Investment Management, Data based on weighted average percentage of corporate bonds universe for the Manulife Sustainable Asia Bond’s representative portfolio and JPMorgan indices. As of 31 December 2021.

III. Superior governance promotion

• Focus on best-in-class6 companies with high quality governance structures and management.
• Identify and engage with companies that strive for higher levels of gender diversity, independence, and best governance practices.

Governance theme: companies with strong corporate governance structures

Board & executive diversity and independence
(% Exposure) 

Source: Manulife Investment Management, JPMorgan indices, 31 December 2021.

# The JPMorgan ESG Asia Credit Index (JESG JACI) tracks the total return performance of the Asia ex-Japan USD-denominated debt instruments across the Asian Fixed Income asset class, including floating, perpetual, and subordinated bonds issued by Sovereign, Quasi-Sovereign and Corporate entities. The index applies an Environmental, Social and Governance (ESG) scoring and screening methodology to tilt toward green bond issues or issuers ranked higher on ESG criteria, and to underweight or remove issuers that rank lower.

*Carbon intensity data sourced via Trucost ESG Analysis and Manulife IM. Carbon intensity refers to Scope 1 & 2 Tons CO2 equivalent emissions per million USD revenues. Definitions: “Scope 1” = All Direct Emissions from the activities of an organisation or under their control. Including fuel combustion on site such as gas boilers, fleet vehicles and air-conditioning leaks. “Scope 2” = Indirect Emissions from electricity purchased and used by the organisation. Emissions are created during the production of the energy and eventually used by the organisation.