Status under the EU Sustainable Finance Disclosure Regulation (SFDR)

Legal Entity Identifier: 5493002EQQLOB9HNG162

A. Summary

The Fund is categorised as one which meets the provisions set out in Article 8 of SFDR as a product which promotes environmental and/or social characteristics and invests in companies with good governance practices. Whilst the Fund does not have as its objective a sustainable investment, it will have a minimum proportion of 5% of sustainable investments with a social objective and an environmental objective in economic activities that do not qualify as environmentally sustainable under the EU Taxonomy.

The Fund promotes climate change mitigation and support for the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution). The Fund also seeks to avoid investments in certain activities with the potential to cause harm to human health and wellbeing by applying binding exclusions.  In addition, the Fund invests a minimum of 5% of its net asset value in sustainable investments. The Fund does not use a reference benchmark to attain its environmental or social characteristics. This Fund seeks an overall income with the potential for capital growth through exposure to investment grade bonds. Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the supplement for the Fund under the heading “Investment Objective and Policies”). The binding elements of the investment strategy described below are implemented as exclusionary screens, which are coded into the compliance module of the Sub-Investment Adviser’s order management system utilising third-party data provider(s) on an ongoing basis. The exclusionary screens are implemented on both a pre- and post-trade basis enabling the Sub-Investment Adviser to block any proposed transactions in an excluded security and to identify any changes to the status of holdings when third-party data is periodically updated.

The Sub-Investment Adviser applies screens to exclude direct investment in corporate issuers based on their involvement in certain activities. Specifically, issuers are excluded if they derive more than 10% of their revenue from oil sands extraction, arctic oil and gas, thermal coal extraction, tobacco, or adult entertainment. Issuers are also excluded if they are deemed to have failed to comply with the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution). The Sub-Investment Adviser uses a pass/fail test meaning that each sustainable investment must meet all three of the requirements below: it positively contributes to an environmental or social objective;

1. it does not cause significant harm to any environmental or social sustainable investment objective; and
2. it follows good governance practices.

The Fund also applies the Firmwide Exclusions Policy (see “Firmwide Exclusions” in the "JHI Responsible Investment Policy”), which includes controversial weapons as detailed under the Prospectus section entitled “Investment Restrictions” in the Prospectus.

For the purposes of the AMF doctrine, the extra-financial analysis or rating is higher than:

1. 90% for equities issued by large capitalisation companies whose registered office is located in "developed" countries, debt securities and money market instruments with an investment grade credit rating, sovereign debt issued by developed countries;
2. 75% for equities issued by large capitalisations whose registered office is located in "emerging" countries, equities issued by small and medium capitalisations, debt securities and money market instruments with a high yield credit rating and sovereign debt issued by "emerging" countries.

Investors should note that a specific index is not designated as a reference benchmark to determine whether the Fund is aligned with the environmental characteristics promoted.

The Sub-Investment Adviser may include positions in the Fund that, based on third-party data or screens, appear to fail the above criteria, where the Sub-Investment Adviser believes that the third-party data is insufficient or inaccurate.

JHI has chosen MSCI’s as its primary data source for ESG (Environmental, Social and Governance) research. Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This ensures helps ensure that consistent data and methodologies are used given an ESG measure per security type and hence can be compared correctly in the portfolio construction process. The ESG Investment Policy, sets out the firmwide approach to ESG Integration Principles, including JHI’s Responsible Investment Principles for long-term investment success, our approaches to Stewardship and Engagement and Baseline Exclusions applied to investee companies.