Manulife Investment Management has published its semiannual Global Intelligence report, an extensive, deep dive on several themes – most focused on the role of sustainable investing and environmental, social and governance (ESG) analysis. Key themes and perspectives from all of the firm’s investment teams include the rise of ESG factors, including biodiversity and stewardship in macroeconomic valuation, the case for Chinese bonds as a stand-alone asset class and the expectations of private equity investors.
“One enduring outcome of the past year is the importance of sustainability,” says Paul Lorentz, president and CEO of Manulife Investment Management. “Against this backdrop, we devote much of the latest edition of Global Intelligence to examining those sustainability scenarios and their impact on investments and investment decisions.”
They add that sustainable investing is essential for illiquid private assets that the firm manages over long term time horizons. “Findings from our private equity team reveal how better stewardship can unlock value in private equity,” the firm’s researchers add.
Climate change factors
Among the topics examined, the firm takes a closer look at how climate change factors and targets can alter an economy’s growth trajectory, the implications of government-led green initiatives on fiscal policy and productivity, and the impact of a growing wealth divide on monetary policy and central bank action. It also examines the inclusion of biodiversity considerations they look at when managing investment portfolios, and takes a closer look at how green bonds have fundamentally changed how people think about the debt market.
Finally, the report examines the potential benefits of Chinese bonds as a replacement for emerging-market debt and suggests the merits of considering China bonds as a stand-alone asset class. It also dissects how a liability-driven investing approach to the management of retirement plan assets can help reduce the risks that a typical plan faces.