How do your sustainability and ESG efforts, including your focus on mental health, reflect wider global issues?
As an organization, we focus on three key areas: empowering sustained health and wellbeing, driving economic inclusive opportunity, and accelerating a sustainable future. These may sound high-level, but they are critical to our mission. Empowering sustained health and wellbeing encompasses financial, mental, and physical health.
We are driving innovation to incentivize healthier behavior among our customers because healthier customers benefit both our business and society. This is crucial as a global life and health insurance company.
Driving inclusive economic opportunity is our second focus, emphasizing diversity, equity, and inclusion. This ties into our third focus, accelerating a sustainable future, where we concentrate on climate change, nature, and biodiversity. These areas intersect significantly. Those most affected by climate change and lacking access to nature and healthy nutrition are often the underserved. Thus, our middle pillar spreads across the other two, highlighting the interconnectedness of these issues. For example, climate change directly impacts mental health, as seen in our research on the effects of flooding and wildfires. These events significantly affect both physical and mental health, which is why understanding and addressing the intersection of these areas is crucial for our business.
Congratulations on making it into the Corporate Knights Global 100. What changed for you to achieve this recognition in 2024 that wasn't there before?
The Corporate Knights Global 100 assessment criteria heavily weighed revenue earned from sustainable sources. Our behavioral insurance segment, particularly through our Vitality Program in the US and our MOVE program in Asia, has been a significant driver of sustainable revenue. These programs leverage behavioral science to incentivize healthier lifestyles, contributing positively to society and our business.
Additionally, our sustainable real estate portfolio and investments in agriculture and timberland, many of which have been certified as sustainable through leading third-party standards, played a crucial role. The growth and acknowledgment of our behavioral insurance and sustainable investment management arm were key factors. Corporate Knights recognized our efforts in driving positive societal impact and generating revenue from sustainable sources, which helped us secure a spot in the Global 100.
ESG standards are sometimes criticized for not being the best measure of cost opportunity. How effective are these standards at Manulife, and is there room for improvement?
At Manulife, we talk about ESG integration, focusing on integrating financially material aspects of sustainable investing into our investment thesis to achieve risk-adjusted returns. This means considering the financial materiality of these factors in our investment decisions. For example, in the natural resources, oil and gas sectors, indigenous relations are a financially material risk. Failing to engage properly with indigenous communities can jeopardize entire operations. This level of risk materiality may not apply to other industries or asset classes but is critical in specific contexts.
From ESG integration to impact investments, we believe a broad range of products enables investors to better meet an equally broad range of client goals. ESG integration at large involves incorporating financially material sustainability risks and opportunities into our investment processes to ensure robust financial performance alongside positive societal and environmental impacts. We also have a suite of products and strategies focused on impact investing, which prioritize environmental or social factors over financial returns.
Can you provide an example where your investments have been successful both financially and in terms of ESG impact?
In our timberland business, we manage forestry investments not just for harvesting wood but also for carbon sequestration. Traditional forestry investments focus on maximizing wood harvests for sale. However, we widen the investment universe by including bogs and swamps, which may not yield significant timber but are excellent for carbon sequestration. We quantify the financial returns from both timber and carbon sequestration, offering a balanced approach that supports financial gains and sustainability goals. Institutions can use carbon credits to access a scaled solution that can help support their climate goals through carbon insets or offset sales while creating additional value from sustainable traditional timber economics and practices.
As sustainability becomes institutionalized, what risks do you see, such as greenwashing, and how do you plan to address them?
The current momentum in the regulatory environment is significant. Major regulators in Canada, the US, and Asia are implementing climate risk management guidelines, which enhance transparency and accountability. For instance, in the last 12 months, regulators in Hong Kong, Singapore, and Malaysia have implemented climate risk management guidelines. .
This regulatory focus will mature the industry, mitigating greenwashing by ensuring rigorous data transparency and reporting. As regulations become more robust, companies will need to maintain high standards of sustainability reporting, reducing the risk of misleading claims and ensuring genuine sustainable practices.
As you look into the future, are you flexible to address new issues, or is your mission fixed? Do you foresee any upcoming trends or concerns?
Our approach is constantly evolving from a sustainability perspective; we remain flexible to adapt to new issues as they arise. The space is dynamic, and real-life events and human behavior evolve rapidly. While we have strong focus areas, we continue to evaluate where value can be gained and risks mitigated. Biodiversity and nature are emerging as significant concerns, potentially becoming as prominent as climate issues. The development of frameworks like the Task Force for Nature-Related Financial Disclosures (TNFD) indicates that nature-related issues will gain traction more quickly due to existing climate frameworks.
Additionally, social inequity and its impact on organizations and industries will become increasingly important. Addressing these issues will be crucial for creating a sustainable and equitable future.
What brings you the most satisfaction in your job?
My satisfaction comes from seeing progress and impact. Over the past five years, we have moved from making commitments to taking action. The initial phase involved bringing issues to the forefront and committing to addressing them. Now, we are in the execution phase, where we can see tangible progress on these issues.
The most rewarding moments are when we make strides in areas we have been working on for years, seeing the fruits of our efforts. The next five years will be about maturing our systems and data, enabling us to make informed decisions and achieve significant progress across climate, health, social equity, biodiversity, and nature. These bright spots of progress give me hope and drive me to continue our work.
