For qualified investors in Chile

Status under the EU Sustainable Finance Disclosure Regulation (SFDR) - Global Sustainable Equity Fund

The Fund is categorised as one which meets the provisions set out in Article 9 of SFDR as a product which promotes environmental and/or social characteristics.

A. Summary

The Investment Manager uses a number of sources/methods to consider the mandatory indicators for principal adverse impacts on sustainability factors (“PAIs”) under the EU Sustainable Finance Disclosure Regulation (SFDR), to determine that its sustainable investments do not cause significant harm to relevant environmental or social objectives. Depending on the indicator, the Investment Manager uses one or more of the following approaches:

Each underlying investment’s activities and reported metrics are screened against significant harm criteria defined by JHI referring to the relevant mandatory PAIs set out under SFDR, dependant on the company’s performance relative to pre-set house level exclusionary criteria (which may be quantitative or qualitative in nature).

Operational ESG assessment - company specific ESG issues are identified and their overall level of exposure to material impacts and risks are assessed against ongoing remediation of those risks.

The Fund’s investment objective aims to provide capital growth over the long term by investing in companies that contribute to the development of a sustainable global economy across environmental and social themes such as cleaner energy, water management and sustainable transport. The Fund does not use a reference benchmark to meets its sustainable investment objective.

This Fund seeks capital growth through investment in the global equity market and specifically through exposure to companies, whose products and services have a positive impact on the environment or society, thereby contributing to the development of a sustainable global economy. Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the section ‘Funds’ of the Prospectus).

The binding elements of the investment strategy described below are implemented as exclusionary screens within the Investment Manager’s order management system, or otherwise integrated within the investment selection and monitoring process utilising third-party data provider(s) and internal proprietary research on an ongoing basis.

Periodic desk reviews are undertaken to identify that sufficient research has been undertaken and documented to evidence that issuers have been correctly mapped to the Investment Manager’s sustainable investment themes, including any relevant revenue thresholds.

The companies in which investments are made are assessed by the Investment Manager to follow good governance practices.

The good governance practices of investee companies are assessed prior to making an investment and periodically thereafter in accordance with the Sustainability Risk Policy (“Policy”).

The Policy sets minimum standards against which investee companies will be assessed and monitored by the Investment Manager prior to making an investment and on an ongoing basis. Such standards may include, but are not limited to, sound management structures, employee relations, remuneration of staff and tax compliance. The Investment Manager attaches particular importance to the assessment of corporate culture, values, business strategy, board composition and diversity, tax transparency, audit, controls and remuneration. Generally accepted corporate governance standards may be adjusted for smaller organisations or to take account of local governance standards where appropriate at the discretion of the Investment Manager.

The Policy can be found incorporated within Janus Henderson’s “ESG Investment Policy” in the “About Us - Environmental, Social and Governance (ESG)” section of the website at www.janushenderson.com.

In addition, the Investment Manager is a signatory to the UN Principles for Responsible Investment (UNPRI). As a signatory, the good governance practices of investee companies are also assessed by having regard to the UNPRI principles prior to making an investment and periodically thereafter.

A minimum of 90% of the investments of the financial product are expected to meet the sustainable investment objective of the financial product. Although the Investment Manager does not target a specific allocation, it is expected that there will be a minimum of 25% invested in sustainable investments with an environmental objective and 25% in sustainable investments with a social objective.

The remaining investments, marked as “not sustainable”, may include cash or cash equivalents in addition to instruments held for the purposes of efficient portfolio management, e.g. temporary holdings of index derivatives.

All investments of the financial product that are used to meet the environmental and/or social characteristics promoted by the financial product are direct investments.

  1. The Investment Manager uses selection criteria to ensure that the Fund invests only in companies that derive at least 50% of their current or future expected revenues from goods and services within the Investment Manager’s sustainable development themes, as set out below:
  • Efficiency
  • Cleaner energy
  • Water management
  • Environmental services
  • Sustainable transport
  • Sustainable property & finance
  • Safety
  • Quality of life
  • Knowledge & technology
  • Health
  1. Carbon - Carbon Intensity Scope 1&2
  2. Carbon - Carbon Footprint Scope 1&2
  3. Overall UNGC Compliance Status
  4. ESG Exclusionary screens - see “G. Methodologies for environmental or social characteristics?” below for details on the exclusions

Details of how the sustainable investments do not cause significant harm to any environmental or social sustainable investment objectives, and the policy to assess good governance practices of the investee companies, are included below.

The Fund’s investment universe is determined by the application of positive screening criteria based on the sustainable investment themes of the Investment Manager noted previously. The Investment Manager uses a proprietary methodology to ensure that companies the Fund invests in derive at least 50% of their current or future expected revenues from goods and services aligned with these sustainability themes and as noted above, has a process in place to determine that its sustainable investments don’t significantly harm other relevant environmental or social objectives.

The Investment Manager aims to maintain a carbon footprint and carbon intensity that is at least 20% below the MSCI World Index.

In addition, the Investment Manager 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 5% of their revenue from production of alcohol, fossil fuel extraction and refining, non-medical animal testing, armaments, fossil fuel power generation, fur, gambling, chemicals of concern, genetic engineering, pornography, intensive farming, tobacco, nuclear power, and meat and dairy production. The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under paragraph 10.15 of the section entitled “Investment Restrictions” in the Prospectus. The Investment Manager anticipates that the negative screening will decrease the Fund’s investment universe by at least 20%.

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

The Fund makes use of both internal resources and external research and data providers. Internal resources comprise specialist sustainability analysts within the investment team and Janus Henderson’s central ESG research team. JHI’s principle external ESG data provider is MSCI, however, the investment manager also uses several other ESG research providers including Sustainalytics, ISS, and Vigeo EIRIS.

Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This ensures 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 proportion of data for a Financial Product that is estimated constantly evolving.

Some data used to support binding criteria as received from external providers may be estimated data. For positions not covered by the external data provider, proprietary research may be used. This could range from proprietary research alignment against the external data vendor to written confirmation from the issuing entity that it aligns to the binding criteria. The appropriateness of the evidence provided is assessed by an independent body at JHI.

Data coverage is directly driven by the coverage of the underlying ESG Data Provider.

JHI’s internal data structure provides sufficient flexibility to incorporate proprietary evidence or adapt evaluations to future requirements.

JHI is aware of data gaps in ESG Research for non-traditional asset classes compared to mainstream asset classes such as equities and debt instruments.

The JHI Sustainability Risk Policy sets out the firmwide ESG Integration Principles, Sustainable Investment Principles and Baseline Exclusions applied to investee companies. These exclusions are based on classifications provided by third-party data ESG data providers. This classification is subject to an investment research override in cases where sufficient evidence exists that the third-party field is not accurate or appropriate.

Each Investment desk completes their own due diligence processes ahead of making any investment decisions within their Article 9 funds, using internal and external tools and research. The Front Office Controls & Governance team provide ongoing assurance that investment products are managed in line with documented sustainability commitments. Financial Risk review and challenge investment management in light of ESG-related risks, alongside traditional market risk metrics, and embed sustainability risk into the risk profiles. Investment Compliance implement exclusionary screening and monitor this on an ongoing basis in addition to elements of manual oversight where relevant.

Details of JHI’s approach to Engagement can be found in the ‘ESG Investment Policy’ published under the ‘ESG Resource Library’ on the Janus Henderson website.

Company engagement forms an important part of the investment process. Meetings with companies incorporate a wide range of topics, including environmental and social issues. The investment manager takes an active approach to communicating our views to companies and seeking improvements in performance, including appropriate standards of corporate responsibility.

The investment manager aims to engage with companies where corporate disclosures on tax practices are poor. This engagement will be in line with the recommendation put forward by the UN PRI in its report Evaluating and engaging on corporate tax transparency: An investor guide.

The Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code.

Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process. The Committee is comprised of representatives of investments portfolio management, corporate governance, accounting, legal and compliance. Additionally, the Proxy Voting Committee is responsible for monitoring and resolving possible conflicts of interest with respect to proxy voting.

B. No significant harm to the sustainable investment objective

The Investment Manager uses a number of sources/methods to consider the mandatory indicators for principal adverse impacts on sustainability factors (“PAIs”) under the EU Sustainable Finance Disclosure Regulation (SFDR), to determine that its sustainable investments do not cause significant harm to relevant environmental or social objectives. Depending on the indicator, the Investment Manager uses one or more of the following approaches:

Each underlying investment’s activities and reported metrics are screened against significant harm criteria defined by JHI referring to the relevant mandatory PAIs set out under SFDR, dependant on the company’s performance relative to pre-set house level exclusionary criteria (which may be quantitative or qualitative in nature).

Operational ESG assessment - company specific ESG issues are identified and their overall level of exposure to material impacts and risks are assessed against ongoing remediation of those risks.

C. Sustainable investment objective of the financial product

The Fund’s investment objective aims to provide capital growth over the long term by investing in companies that contribute to the development of a sustainable global economy across environmental and social themes such as cleaner energy, water management and sustainable transport. The Fund does not use a reference benchmark to meets its sustainable investment objective.

D. Investment Strategy

This Fund seeks capital growth through investment in the global equity market and specifically through exposure to companies, whose products and services have a positive impact on the environment or society, thereby contributing to the development of a sustainable global economy. Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the section ‘Funds’ of the Prospectus).

The binding elements of the investment strategy described below are implemented as exclusionary screens within the Investment Manager’s order management system, or otherwise integrated within the investment selection and monitoring process utilising third-party data provider(s) and internal proprietary research on an ongoing basis.

Periodic desk reviews are undertaken to identify that sufficient research has been undertaken and documented to evidence that issuers have been correctly mapped to the Investment Manager’s sustainable investment themes, including any relevant revenue thresholds.

The companies in which investments are made are assessed by the Investment Manager to follow good governance practices.

The good governance practices of investee companies are assessed prior to making an investment and periodically thereafter in accordance with the Sustainability Risk Policy (“Policy”).

The Policy sets minimum standards against which investee companies will be assessed and monitored by the Investment Manager prior to making an investment and on an ongoing basis. Such standards may include, but are not limited to, sound management structures, employee relations, remuneration of staff and tax compliance. The Investment Manager attaches particular importance to the assessment of corporate culture, values, business strategy, board composition and diversity, tax transparency, audit, controls and remuneration. Generally accepted corporate governance standards may be adjusted for smaller organisations or to take account of local governance standards where appropriate at the discretion of the Investment Manager.

The Policy can be found incorporated within Janus Henderson’s “ESG Investment Policy” in the “About Us - Environmental, Social and Governance (ESG)” section of the website at www.janushenderson.com.

In addition, the Investment Manager is a signatory to the UN Principles for Responsible Investment (UNPRI). As a signatory, the good governance practices of investee companies are also assessed by having regard to the UNPRI principles prior to making an investment and periodically thereafter.

E. Proportion of investments

A minimum of 90% of the investments of the financial product are expected to meet the sustainable investment objective of the financial product. Although the Investment Manager does not target a specific allocation, it is expected that there will be a minimum of 25% invested in sustainable investments with an environmental objective and 25% in sustainable investments with a social objective.

The remaining investments, marked as “not sustainable”, may include cash or cash equivalents in addition to instruments held for the purposes of efficient portfolio management, e.g. temporary holdings of index derivatives.

All investments of the financial product that are used to meet the environmental and/or social characteristics promoted by the financial product are direct investments.

F. Monitoring of sustainable investment objective

  1. The Investment Manager uses selection criteria to ensure that the Fund invests only in companies that derive at least 50% of their current or future expected revenues from goods and services within the Investment Manager’s sustainable development themes, as set out below:
  • Efficiency
  • Cleaner energy
  • Water management
  • Environmental services
  • Sustainable transport
  • Sustainable property & finance
  • Safety
  • Quality of life
  • Knowledge & technology
  • Health
  1. Carbon - Carbon Intensity Scope 1&2
  2. Carbon - Carbon Footprint Scope 1&2
  3. Overall UNGC Compliance Status
  4. ESG Exclusionary screens - see “G. Methodologies for environmental or social characteristics?” below for details on the exclusions

Details of how the sustainable investments do not cause significant harm to any environmental or social sustainable investment objectives, and the policy to assess good governance practices of the investee companies, are included below.

The JHI Sustainability Risk Policy sets out the firmwide ESG Integration Principles, Sustainable Investment Principles and Baseline Exclusions applied to investee companies. These exclusions are based on classifications provided by third-party data ESG data providers. This classification is subject to an investment research override in cases where sufficient evidence exists that the third-party field is not accurate or appropriate.

Each Investment desk completes their own due diligence processes ahead of making any investment decisions within their Article 9 funds, using internal and external tools and research. The Front Office Controls & Governance team provide ongoing assurance that investment products are managed in line with documented sustainability commitments. Financial Risk review and challenge investment management in light of ESG-related risks, alongside traditional market risk metrics, and embed sustainability risk into the risk profiles. Investment Compliance implement exclusionary screening and monitor this on an ongoing basis in addition to elements of manual oversight where relevant.

G. Methodologies

The Fund’s investment universe is determined by the application of positive screening criteria based on the sustainable investment themes of the Investment Manager noted previously. The Investment Manager uses a proprietary methodology to ensure that companies the Fund invests in derive at least 50% of their current or future expected revenues from goods and services aligned with these sustainability themes and as noted above, has a process in place to determine that its sustainable investments don’t significantly harm other relevant environmental or social objectives.

The Investment Manager aims to maintain a carbon footprint and carbon intensity that is at least 20% below the MSCI World Index.

In addition, the Investment Manager 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 5% of their revenue from production of alcohol, fossil fuel extraction and refining, non-medical animal testing, armaments, fossil fuel power generation, fur, gambling, chemicals of concern, genetic engineering, pornography, intensive farming, tobacco, nuclear power, and meat and dairy production. The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under paragraph 10.15 of the section entitled “Investment Restrictions” in the Prospectus. The Investment Manager anticipates that the negative screening will decrease the Fund’s investment universe by at least 20%.

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

H. Data sources and processing

The Fund makes use of both internal resources and external research and data providers. Internal resources comprise specialist sustainability analysts within the investment team and Janus Henderson’s central ESG research team. JHI’s principle external ESG data provider is MSCI, however, the investment manager also uses several other ESG research providers including Sustainalytics, ISS, and Vigeo EIRIS.

Where coverage gaps are identified, specialist ESG Data vendors or inhouse research may be used to complement the ESG research. This ensures consistent data and methodologies are used given an ESG measure per security type and hence can be compared correctly in the portfolio construction process.

JHI has built a centralised proprietary research alignment process; The central research alignment process aligns data at three different levels

  1. Entity Level,
  2. Position Level, and
  3. Fund Level.

The research alignment and mapping capability is critical to JHI's ESG (Environmental, Social and Governance) methodology, as we recognize a security could inherit the ESG information from the issuing legal entity, however, some ESG risks will be instrument specific.

JHI applies a series of Data Quality rules to ensure the integrity of the data being ingested into the central research alignment solution. JHI data that is not aligned correctly to the definition as provided by the data vendor is not ingested into the central cloud-based data warehouse and exceptions are raised. These exceptions are monitored and remediated by a central support team. Remediation includes challenging the data provider or internal operations supporting internally managed Systems of Records. Where appropriate the Data Owner responsible and accountable for the data is notified through the internal Data Governance process to resolve outstanding exceptions.

JHI receives weekly automated data feeds from external ESG Data vendors, which are ingested into a cloud-based data warehouse. Once the data is ingested and Data Quality checks have been performed the raw data is mapped to JHI’s internal taxonomy structure. This ensures that all ESG data from the data warehouse is made available consistently across all downstream JHI applications supporting the different stages in the investment process.

The proportion of data for a Financial Product that is estimated constantly evolving.

Some data used to support binding criteria as received from external providers may be estimated data. For positions not covered by the external data provider, proprietary research may be used. This could range from proprietary research alignment against the external data vendor to written confirmation from the issuing entity that it aligns to the binding criteria. The appropriateness of the evidence provided is assessed by an independent body at JHI.

I. Limitations to methodologies and data

Data coverage is directly driven by the coverage of the underlying ESG Data Provider.

JHI’s internal data structure provides sufficient flexibility to incorporate proprietary evidence or adapt evaluations to future requirements.

JHI is aware of data gaps in ESG Research for non-traditional asset classes compared to mainstream asset classes such as equities and debt instruments.

J. Due diligence

The JHI Sustainability Risk Policy sets out the firmwide ESG Integration Principles, Sustainable Investment Principles  and Baseline Exclusions applied to investee companies. These exclusions are based on classifications provided by third-party data ESG data providers. This classification is subject to an investment research override in cases where sufficient evidence exists that the third-party field is not accurate or appropriate.

Each Investment desk completes their own due diligence processes ahead of making any investment decisions within their Article 9 funds, using internal and external tools and research. The Front Office Controls & Governance team provide ongoing assurance that investment products are managed in line with documented sustainability commitments. Financial Risk review and challenge investment management in light of ESG-related risks, alongside traditional market risk metrics, and embed sustainability risk into the risk profiles. Investment Compliance ensure that ESG-related activities are managed in line with regulatory requirements and expectations, and considered within our compliance framework.

K. Engagement Policies

In addition to the binding elements of the investment strategy described above, stewardship forms an integral and natural part of Janus Henderson’s long-term, active approach to investment management. Details of JHI’s approach to Engagement can be found in the ‘ESG Investment Policy’ published under the ‘ESG Resource Library’ on the Janus Henderson website.

Company engagement forms an important part of the investment process. Meetings with companies incorporate a wide range of topics, including environmental and social issues. The investment manager takes an active approach to communicating our views to companies and seeking improvements in performance, including appropriate standards of corporate responsibility.

Ultimate voting authority rests with the portfolio manager, who is responsible for ensuring that votes are exercised in the best interests of clients with ESG factors an important consideration where relevant. The portfolio manager is supported by the in-house Governance and Stewardship team who work closely with investment teams to help analyse voting-related issues. With regard to voting and company engagement, the portfolio manager considers certain core principles such as disclosure, transparency, board composition, shareholder rights, audit and internal controls, and remuneration. A key element of the approach to proxy voting is to support these principles and practices and foster the long-term interests of shareholders.

At the beginning of each year, the investment manager constructs a list of key engagement topics.  Analysis of the portfolio against impact data such as the SDGs and ESG KPIs informs this list together with the controversies, scientific advances and positive actions taken by the companies with the portfolio. This is not a fixed list and is subject to change depending on the activities of the company and the materiality of certain topics. This list is published in the Fund’s Annual Sustainability Report.

As the investment process incorporates high standards on sustainability issues, there will be very few shareholder proposals on ESG issues. The investment manager aims to initiate/support shareholder proposals on sustainability aspects for portfolio holdings following our approach to voting and engagement outlined above.

The investment manager aims to engage with companies where corporate disclosures on tax practices are poor. This engagement will be in line with the recommendation put forward by the UN PRI in its report Evaluating and engaging on corporate tax transparency: An investor guide.

The Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code.

Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process. The Committee is comprised of representatives of investments portfolio management, corporate governance, accounting, legal and compliance. Additionally, the Proxy Voting Committee is responsible for monitoring and resolving possible conflicts of interest with respect to proxy voting.

L. Attainment of the sustainable investment objective

The Fund does not use a reference benchmark to meets its sustainable investment objective.

a. Principal adverse impacts (PAI)

PAIs are considered at product level1 and the below table lists the Product Level PAIs only. The table below sets out where PAI is considered through the use of exclusionary screens and engagement with companies:

Adverse Sustainability Indicator Metric How is PAI considered
Greenhouse gas emissions GHG emissions Scope 1 GHG emissions Exclusionary screen
Scope 2 GHG emissions Exclusionary screen
  Carbon footprint Carbon footprint Exclusionary screen
GHG Intensity of investee companies HG intensity of investee companies Exclusionary screen
  Exposure to companies active in the fossil fuel sector Share of investments in companies active in the fossil fuel sector Exclusionary screen
Social and employee matters Share of investments in investee companies involved in the manufacture or selling of controversial weapons Exposure to controversial weapons (anti-personnel mines, cluster munitions, chemical weapons and biological weapons) Exclusionary screen
  Violations of UN Global Compact principles and Organisation for Economic Cooperation and Development (OECD) Guidelines for Multinational Enterprises Share of investments in investee companies that have been involved in violations of the UNGC principles or OECD Guidelines for Multinational Enterprises Exclusionary screen

1 This was effective as of 1 June 2022 and periodic reporting will commence from 1 January 2023 for the first reference period from 1 June 2022

 

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