Australian Fixed Interest: ESG enhancements and accomplishments across 2024 & 2025

ESG integration is a central part of the Janus Henderson Australian Fixed Interest Team’s investment process^* and is something we continue to work to enhance and improve upon. As the market has evolved, our team has worked hard to evolve with it in our consideration of ESG factors. Like we have done back in previous years, in this article we provide an overview of our key accomplishments over the past two years. This includes the growth of our Sustainable Credit Fund and winning of other sustainable mandates, our efforts in conducting and reporting of ESG engagements and active stewardship, having our Sustainable Credit Fund accredited by the Responsible Investment Association Australasia (RIAA) as the highest available sustainable rating, and developments in our reporting, internal data collection and ESG ratings of issuers.

Our team continues to encourage the development of positive impact capital markets. Given the bespoke nature of bonds and complexity in structuring, as active managers we have been engaging directly with CFOs and treasury teams, as well as debt origination desks within banks, to ensure our clients’ interests are appropriately considered while seeking to promote a viable way to grow the local positive impact investing landscape. We have worked hard to ensure that we have a seat at the table when new positive impact bonds are being developed and subsequently issued. These early conversations help grow the market and benefit our clients when we achieve favourable terms and allocations during the syndication process.

At the end of December 2025, on behalf of our clients we had A$2.37 billion invested in Green, Social, Sustainability and Sustainability-Linked Bonds (GSSSB); nearly 80% higher than our holdings two years ago.

A three-year track record for the Janus Henderson Sustainable Credit Fund (ASX:GOOD)

In March 2023 we launched the Janus Henderson Sustainable Credit Fund – a diversified credit portfolio that invests in debt securities issued by companies that we deem to have robust sustainable practices, and those companies that have the potential to enhance outcomes for society’s wellbeing and protection of the planet. Through our rigorous screening and selection process, we look for investment opportunities that help to address themes such as poverty, gender equality, affordable housing, and disability, as well as planet-related themes including decarbonisation, biodiversity, sustainable buildings and the establishment of a circular economy. In the past year we have added the additional theme of health and wellbeing which targets issuers that support strong healthcare systems, promote social wellbeing, and ensure safe, healthy workplaces.

Available as a managed fund and an active ETF trading on the ASX under the ticker ‘GOOD’, this fund is an actively managed portfolio which includes securities such as corporate debt, hybrids, asset backed securities and liquid instruments.

The Janus Henderson Sustainable Credit Fund seeks to achieve a total return before fees that exceeds the total return of the Bloomberg AusBond Composite 0-5yr Index by 0.75% p.a. over rolling three-year periods. It has a dual mandate, seeking to deliver on sustainability and return objectives.

This fund now has a three-year track record, and we are proud to say that performance has been strong, with the fund consistently outperforming its target since inception.

The fund is rated as “Sustainable Plus’ by RIAA (see further on this below) and has been recommended by Zenith¹ and Lonsec².

As a testament to our sustained focus in this area, we are fortunate to have secured two sustainable mandates that we have been managing since early 2025. These sizeable mandates are custom designed to meet the client’s specific sustainability and return objectives, supported by a bespoke investment process developed collaboratively between our team and the end client. These mandates, together with our Sustainable Credit Fund and the labelled bonds held in other portfolios, put us on the leader board in terms of managing money in this space within Australia. This is something we are very proud of and will continue to dedicate resources to continual enhancement and best practice.

Sustainability report

In 2025 we launched our inaugural Sustainable Credit Fund annual ESG, sustainability and climate report for clients. This report is aimed at offering a more in-depth insight into the types of companies that we have included in the Sustainable Credit Fund and includes sustainability performance and additional ESG data. This is complemented by our monthly commentary and quarterly ESG reporting (see more details below). Please view the publication released in 2026 here. Please ask your Janus Henderson representative for a copy.

40 sustainability focused engagement meetings held with issuers in the last two years

An integral part of our investment process involves engagement with companies and issuers around emerging ESG issues and themes and a company’s response to them. This may include themes such as modern slavery risks or climate related issues, or more broadly a discussion around an issuers’ sustainability credentials. These ESG engagements are undertaken by the team in addition to regular issuer meetings, in which we would ask ESG-aligned questions, such as during the credit approval process, company reporting and the roadshow of a new bond deal. 2024 and 2025 were no different, with company engagements remaining core to our credit process. Since 30 June 2020, we have been publishing the findings from these meetings in our quarterly ESG engagement report. Please contact your usual Janus Henderson representative if you would like to receive these each quarter.

Specifically in the past two years, there have been some robust conversations had with issuers that have fallen short of the standards we expect from the businesses that we invest in. We consider it part of our responsibility to use active stewardship to improve ESG practices and long-term performance at these companies. By engaging with them it also helps us understand their ESG risks so we can protect portfolios where we see material ESG risks affecting the credit profile. Details of our engagement meetings can be found in the quarterly ESG engagement reports.

Types of topics discussed:

Environmental	Social	Governance
Climate change	Political / regulatory change	Internal culture / employee satisfaction
Circular economy	Cyber / data security	Governance systems
Energy efficiency	Demographic changes	Diversity and inclusion
Sustainable transport	Modern slavery / supply chain	Corporate ethics
Plastic waster	Consumer preferences	Transparency and reporting
Biodiversity	Product safety	Board composition and oversight

 

Firmwide Client Reporting

For the past year we have been producing quarterly ESG reporting for specific funds and mandates which include carbon metrics, MSCI risk ratings/scores and engagement activity.

With the introduction of mandatory climate reporting in Australia under AASB S2, and with asset owners soon required to begin reporting, we have been enhancing our reporting suite to include additional metrics such as implied temperature ratings and climate value at risk, along with visibility on the issuers in the portfolio that are the highest contributors. We look forward to providing these enhanced reports to clients in due course. In the meantime, please feel free to reach out to your representative if you have suggestions for other metrics that would be helpful for client reporting.

As an educational, we also produced a thought piece on this new reporting regime which can be found here.

Sustainability certifications

ERIG Index

Over the past three years all our Australian Fixed Interest funds were awarded the highest ESG rating (1st quartile) by Evergreen³ (ERIG – Evergreen Responsible Investment Rating).^{^}

This differentiates our offering and ESG capabilities when compared against 109 other funds rated by Evergreen in Australian Fixed Interest.

Responsible Investment Association Australasia (RIAA)

Over the past year we are delighted to have received the highest RIAA certification available for a fund. Our Sustainable Credit Fund & Active ETF (ASX: GOOD) were accredited as “Sustainable Plus” while our Tactical Income Fund & Active ETF (CBOE: TACT), Australian Fixed Interest Fund and Australian Fixed Interest Fund – Institutional (where ESG is integrated) were certified as responsible.4

ESG explore – Capturing ESG data of issuers and portfolios

Over the past five years, the Australian Fixed Interest Team have been collating ESG data on companies (where available) as part of our holistic framework. We used data from research providers MSCI, Sustainalytics and ISS. As a firm, Janus Henderson has progressed, developing a comprehensive analytical tool with a direct feed from MSCI that we can now use, saving time with data mining on desk. This platform measures a company’s Scope 1 and 2 greenhouse gas emissions, ESG risk rating by Sustainalytics (low, medium, high, severe), ESG controversies, product involvement (including other sectors that we don’t negative screen for, such as alcohol and gambling), gender diversity in senior management, biodiversity, implied temperature rise of portfolios and climate value at risk (CvaR) amongst other things.

Further, the wide range of data in ESG Explore is interactive, with drill-down capabilities, and provides industry or benchmark comparisons for our team to better evaluate the implications of the data. It also allows a drill down into our engagement work, offering a quick summary by portfolio of topics discussed with issuers.

A recent enhancement to this platform has been the internal rating of issuers on their governance. This ‘good governance methodology’ requires issuers to meet good governance standards – covering management structures, employee relations, remuneration and tax compliance.

Governance practice with respective MSCI metrics

Sound management structures	Employee relations	Remunerations of staff	Tax compliance
Governance controversy flag	UN global compact alignment	Pay controversy	Tax transparency score
Board majority independent of management	Labour rights – controversy flag	Significant vote against pay practices	Accounting investigations
			Auditor reports concerns

Government engagement

As the sustainable market evolves, we continue to have conversations with market participants and governments. For example, we were instrumental on working with the Australian Office of Financial Management (AOFM) when it launched its first green bond, offering them feedback regarding our appetite and the type of structure and assets that would most appeal. We continue to have regular meetings with them on eligible assets in that framework.

We have also offered feedback to the government as part of its Treasury Consultation Paper (CP) on ‘Sustainable investment product labels’. The Treasury’s purpose of implementing this new product labelling system is to create “consistent rules for the use of sustainability terms” which “would reduce or eliminate this uncertainty and increase the confidence of product issuers to make sustainability claims.” The government’s Australian taxonomy which is being developed is another key pillar in Australia’s sustainable finance roadmap. The product labels will create consumer transparency while the taxonomy ensures technical integrity.

Ongoing education

We are also enhancing our investment teams’ capabilities through an exciting collaboration with UC Berkeley Executive Education, launching the Janus Henderson x Berkeley Insight Collective in November 2024. This strategic partnership marks a significant milestone in our firm’s commitment to deepening our understanding of the financial implications of climate change and biodiversity. Our partnership with UC Berkeley will strengthen our fundamental approach to assessing financially material environmental risks. Topics will range from foundational information on planetary boundaries, carbon budgets, and ecosystem services to more advanced studies of how to model impacts on cost structures, risks, and margins, as well as evaluating corporate transitions plans. We are excited to leverage UC Berkeley’s scientific research capabilities, backed by an impressive heritage of 60 Nobel laureates, the leading Haas School of Business, and the Rausser College of Natural Resources to enhance our responsible investing process. Climate change and biodiversity are two of many factors that can impact cash flows, valuations, and cost of capital. Our work with UC Berkeley faculty will give investment teams, and ultimately clients, the tools they need to assess company performance

More work to be done:

Looking to 2026, we remain focused on incorporating ESG factors into our investment process and keeping abreast of best practice and regulatory changes in this rapidly changing environment.