The insurance giant using investment savvy, reach to solve the sustainability funding challenge
One global company is leading the way in financing projects that benefit the planet by cutting emissions
What role do insurance companies play, and what responsibility do they have, in combating climate change? And how can they inspire a shared sense of purpose across communities, other industries, geographies and the entire world? The answer rests in the insurance industry’s reach, investment expertise and core commitment to provide peace of mind for more vibrant, engaged and productive societies.
The industry directs a large range of funds invested in other companies and organizations around the world. As such, Sarah Chapman, Global Chief Sustainability Officer at Manulife believes that climate change must “affect the decisions we make every day, what we buy, how we invest and how we plan for retirement.”
These investment decisions impact the size of the challenge that confronts us: the International Energy Agency estimates the world must invest $4 trillion annually from 2026 to 2030 in low-carbon energy efficiency and carbon removal technologies and practices to reach net zero emissions by 2050. What part does Manulife play? Roy Gori, President and CEO at Manulife says that as a Top 25 Global Money Manager, investing with shared purpose is an extension of the company mission – “Decisions made easier, lives made better”:
“Those six words resonate in every aspect of our Impact Agenda, which is built on three interconnected areas of focus: empowering our sustained health and wellbeing, driving inclusive opportunity and accelerating a sustainable future.”
Through its General Account, Manulife largely collects funds from shareholders, debtholders and policyholders and invests those funds across different asset classes around the globe. The primary objective of Manulife’s General Account is to match assets to liabilities which are long-term by nature, to ensure that the insurance company can pay out on claims.
This model helps Manulife position as a critical solutions investor in the global market and as such with an opportunity to be a force for positive change. This builds on Manulife’s proven commitment towards sustainability per its operations already at net zero, but Sarah Chapman says they will go further:
“We have committed to reducing our absolute emissions by 35 percent by 2035. From an investment perspective, we are committed to net zero financed emissions by 2050. And we are working on shorter term targets across our most carbon intensive. From a product and services perspective, we will drive innovation toward our impact-focused products, providing opportunities for our clients and customers to be part of the solution to climate change.”
Manulife has committed to the science-based target initiative to guide and validate their target setting, measurement and progress reporting. The company has also enthusiastically invested in renewable energy, more efficient real estate and natural responses to climate change in the timber and agriculture area.
Such investments include Silicon Ranch, which specializes in renewable energy solutions, hydrogen and carbon-capture technologies, and offshore wind technology with a portfolio that includes more than 4 gigawatts of solar and battery storage. Another example was an equity loan to First Nation Limited Partnership, the majority owners of the Wataynikaneyap Transmission Project. The equity loan is being used to build 1,800 kilometers of power transmission lines in Northern Ontario, Canada. The Indigenous-led project is majority-owned by 24 First Nation communities, in partnership with Fortis Inc. and other private investors and will supply clean, reliable energy to thousands of residents in 17 remote First Nation communities reducing their reliance on costly and environmentally risky diesel generation. The project will create up to 1,300 construction jobs and result in over 6.6 million tons of avoided carbon dioxide over 40 years.
Supporting the transition to a net zero economy is a big focus for the company and they are taking an innovative approach to sustainable finance. Halina von dem Hagen, Global Treasurer and Head of Capital Management at Manulife goes through the numbers:
“On our balance sheet, we have over $40 billion of assets within our General Account that would qualify as sustainable. Manulife launched the very first green bond by a global life insurance company. We raised half a billion Singapore dollars in 2017. The funds were used towards wind farms and solar energy projects in Canada. Our issuances of two green bonds contribute over 190,000 tons in reduction of CO2 every year.”
In March of this year, Manulife issued its third green bond, this time in the U.S. market raising US$750 million. With three issuances to date, Manulife’s outstanding green bond issuance amounts to C$2 billion.
This commitment to sustainability has impacted the day-to-day working environment at Manulife. Thejvir Bhattii, Senior Analyst, General Account Investment Team at Manulife explains:
“Traditionally, you have your finance team on one side and the sustainability team on the other. What a sustainable debt issuance does is that it brings these two teams together within the General Account of Manulife. To foster this collaboration we have created an internal climate change working group. Teams meet up for about an hour a week, we share best practices and promote a culture where we decide on how to best move forward towards our sustainability pledges, as well as how we can better improve our sustainability actions.”
Roy Gori recognizes what Manulife has achieved, but the work must continue to meet the goals set by science:
“Failure to meet these goals will result in reduced prosperity around the world. And that's exactly why we'll continue to take action with our partners to invest in impactful and innovative solutions. And to me, there's no higher calling.”