What role do insurance companies play in combating climate change? The industry controls a large proportion of funds invested in other companies around the world. As such, Sarah Chapman, Global Chief Sustainability Officer at Manulife says 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 add up to 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 to reach net zero emissions by 2050. What part is Manulife playing? Roy Gori, President and CEO at Manulife says that as a Top 25 Global Money Manager, investing well 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 inclusion and economic opportunity and accelerating a sustainable future.” 

An insurance business like Manulife will collect funds from shareholders, debtholders and policyholders and invest those funds across different asset classes around the globe. The primary objective of the general account is to match assets to liabilities, to ensure that the insurance company is able to pay out on claims. 

This model means that insurance companies are the unsung investors in the global market and as such have an opportunity to be a force for change. Manulife has already made strides towards sustainability: the company’s operations are already at net zero. Sarah Chapman says they can go further: 

“We have committed to reducing our absolute emissions by 35 percent by 2035. From an investment perspective, we are committed to steering our portfolio to be net zero by 2050. And we are working on shorter term targets across our most carbon intensive sectors. From a product and services perspective we will drive innovation toward our impact-first 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 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 is a fully integrated provider of customized renewable energy and battery storage solutions for a diverse set of partners across North America, with a portfolio that includes more than 4 gigawatts of solar and battery storage systems that are contracted, under construction, or operating across the U.S. and Canada. One of Manulife’s big success stories has been an equity loan to the majority owners of the Wataynikaneyap Transmission Project. This was used to build 1,800 kilometers of power transmission lines in Northern Ontario, Canada. The indigenous-led project will supply clean, reliable energy to thousands of residents, create up to 1,300 construction jobs and result in over 6.6 million tons of avoided carbon dioxide over 40 years. 

Sustainability is therefore a priority for the company – and they are putting their money where their mouth is. Halina von dem Hagen, Global Treasurer and Head of Capital Management at Manulife goes through the numbers: 

“On our balance sheet, we had $40 billion or so of assets 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.” 

This commitment to sustainability has even impacted the day-to-day working environment at  Manulife. Thejvir Bhattii, Senior Analyst, General Account Investment Team at Manulife 4 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 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.”

As Roy Gori says, he is proud of what has been achieved, but the work must continue to achieve 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.”