For qualified investors in Chile

Status under the EU Sustainable Finance Disclosure Regulation (SFDR) - Sustainable Future Technologies Fund

Janus Henderson Fund – Sustainable Future Technologies 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:

The Investment Manager applies screens to avoid investing in issuers involved in or deriving revenues from certain activities as described below;

The Investment Manager’s internal ESG process control monitor tool (“PCM”) which includes ESG related metrics to assess company performance on ESG indicators and identifies ESG laggards based on its proprietary methodology;

Controversy monitoring;

The use of third-party data to identify ESG laggards using an industry relative rating which incorporates a weighted average score across key ESG issues; and

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).

The Fund’s investment objective aims to provide capital growth over the long term by investing in technology-related companies that contribute to the development of a sustainable global economy across environmental and social themes. 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 technology-related 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 Fund integrates environmental, social and governance factors into the bottom-up, fundamental company analysis and valuation. Fundamental research enables the Investment Manager to navigate the hype cycle1 of sustainable technology as well as identifying companies that are making a positive contribution to environmental and social themes. The investment process considers and monitors climate and environmental indicators as well as social and employee matters as part of its investment due diligence process and responds to these through exercising voting rights, active engagement and action plans that have a bearing on investment decisions.

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 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).

1The “hype cycle” represents the different stages in the development of a technology from conception to widespread adoption, which includes investor sentiment to that technology and related stocks during that cycle.

A minimum of 90% of the investments of the financial product are used 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 investments with an environmental objective and 25% in 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 characteristics promoted by the financial product are direct investments.

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 technology themes, as set out below:

  • Clean Energy Technology
  • Resource & Productivity Optimisation
  • Smart Cities
  • Low Carbon Infrastructure
  • Sustainable Transport
  • Digital Democratisation
  • Tech Health
  • Data Security
    2. Carbon - Carbon Intensity Scope 1&2
    3. Carbon - Carbon Footprint Scope 1&2
    4. Overall UNGC Compliance Status
    5. % of the portfolio aligned with the Fund’s sustainability themes
    6. Number of companies engaged with, in line with the Investment Manager’s engagement approach
    7. 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 Front Office Controls & Governance team provide ongoing assurance that investment products are managed in line with documented sustainability commitments.

The Fund’s investment universe is determined by the application of positive screening criteria based on the sustainable technology investment themes of the Investment Manager. 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.

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 have any involvement with chemicals of concern, fossil fuel extraction and refining, fossil fuel power generation, genetic engineering, incendiary weapons, or nuclear weapons; or more than 5% of their revenue from production of alcohol, non-medical animal testing, fur, gambling, pornography, intensive farming, tobacco, or nuclear power. 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 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 screening criteria 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.

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:

The Investment Manager applies screens to avoid investing in issuers involved in or deriving revenues from certain activities as described below;

The Investment Manager’s internal ESG process control monitor tool (“PCM”) which includes ESG related metrics to assess company performance on ESG indicators and identifies ESG laggards based on its proprietary methodology;

Controversy monitoring;

The use of third-party data to identify ESG laggards using an industry relative rating which incorporates a weighted average score across key ESG issues; and

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).

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 technology-related companies that contribute to the development of a sustainable global economy across environmental and social themes. 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 technology-related 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 Fund integrates environmental, social and governance factors into the bottom-up, fundamental company analysis and valuation. Fundamental research enables the Investment Manager to navigate the hype cycle1 of sustainable technology as well as identifying companies that are making a positive contribution to environmental and social themes. The investment process considers and monitors climate and environmental indicators as well as social and employee matters as part of its investment due diligence process and responds to these through exercising voting rights, active engagement and action plans that have a bearing on investment decisions.

Periodic desk reviews are undertaken to verify that the revenue mapping to sustainable technology themes is appropriate with reference to Investment Manager qualification and independent company analysis.

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.

1 The “hype cycle” represents the different stages in the development of a technology from conception to widespread adoption, which includes investor sentiment to that technology and related stocks during that cycle.

E. Proportion of investments

A minimum of 90% of the investments of the financial product are used 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 investments with an environmental objective and 25% in 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

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 technology themes, as set out below:

Clean Energy Technology

Resource & Productivity Optimisation

Smart Cities

Low Carbon Infrastructure

Sustainable Transport

Digital Democratisation

Tech Health

Data Security

  1. Carbon - Carbon Intensity Scope 1&2
  2. Carbon - Carbon Footprint Scope 1&2
  3. Overall UNGC Compliance Status

% of the portfolio aligned with the Fund’s sustainability themes

Number of companies engaged with in line with the Investment Manager’s engagement approach

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. 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 technology investment themes of the Investment Manager. 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.

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 have any involvement with chemicals of concern, fossil fuel extraction and refining, fossil fuel power generation, genetic engineering, incendiary weapons, or nuclear weapons; or more than 5% of their revenue from production of alcohol, non-medical animal testing, fur, gambling, pornography, intensive farming, tobacco, or nuclear power. 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 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 screening criteria 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 relies on a number of third party data suppliers in combination with proprietary in-house research to attain the environmental or social characteristics promoted.

Binding exclusions applied to the fund in order to avoid investment in certain activities with the potential to cause harm to human health and wellbeing or the environment are based on Vigeo Eiris data. The exclusions are monitored via a compliance monitoring system.

The firmwide exclusion on controversial weapons is applied using MSCI data. For the promotion of climate change mitigation, the fund relies on supplementary carbon emissions data from ISS. Support for the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution) relies on data from Sustainalytics.

Proxy voting is provided by ISS, supported by the Central Governance and Stewardship team/ Central JHI ESG team. Company engagement data is managed and covered by the investment team*.  Controversies data is supplemented by RepRisk. Broker, academic and industry research, as well as internal proprietary research data may also inform views on all of these. Action plans and engagement data is manual and collected by the investment team.

As available offerings by data providers develop, the investment manager may update data processes.

At the portfolio level, to ensure data quality of ESG data several processes take place. Issuer mapping consists of checks to remove duplicate issuers, unmapped issuers and varying issuer identifier methodology. Action Plans and Engagement data are checked via data deep dives.

Where exclusions data is not available or the investment team disagrees with the assessment, the dedicated sustainability analyst assists the investment analyst to determine if the potential holding is in breach of the fund’s exclusion policy. Where required, the analysis is then shared with an independent oversight body at JHI to validate the assessment.

Depending on data availability, monthly and/or annual data feeds from a number of third party data suppliers are manually downloaded by the investment team. The central JHI ESG team support across some of the data processes.

The proportion of estimated data is continually evolving and is supplemented by internal research provided by the investment team where necessary.

*The investment team referenced in this document includes: a dedicated sustainability analyst, investment analysts and a research support team.

I. Limitations to methodologies and data

The investment manager recognises the limitations of static scoring of complex issues with imperfect data and disclosures and varying methodologies. Active management and deep sector and ESG expertise are crucial to navigate this.

Materiality is assessed based on SASB, GRI, EU PAIs, TCFD, Taxonomy, our dedicated sustainability analyst and investment team’s understanding of ESG and technology. As tech sector specialists with a dedicated sustainability analyst, the team is best placed to assess materiality and to navigate innovations and disruption in this space.

For the purposes of exclusionary screens, where there is data missing, evidence will be presented to an independent oversight body at JHI.

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 implement exclusionary screening and monitor this on an ongoing basis in addition to elements of manual oversight where relevant.

K. Engagement Policies

The investment manager takes a pro-active approach to communicating views to companies and seeking improvements in performance and standards of corporate responsibility and governance and supports core principles such as disclosure, transparency and consistency. Each company held in the portfolio is reviewed in relation to its environmental, social and governance risks according to a proprietary engagement framework.

See Janus Henderson’s ESG Investment Policy at www.janushenderson.com and the strategy’s V&E policy & report and ‘Investment Principles’ document for more information.

  • The approach to ESG voting and engagement is considered ‘evidence-based’, systematic and pragmatic.
  • Engagement work can be company specific or thematic led and represents a mixture of proactive and reactive engagement.
  • Analysis of the portfolios against ESG data informs this list together with the controversies, scientific advances, internal/external research and positive actions taken by the companies within the portfolio.
  • The investment manager engages directly with companies via formal and informal meetings, calls and in writing, providing thought leadership in engagement on complex social and environmental issues.

Where needed, ad hoc ESG deep dives are conducted by the dedicated sustainability analyst.

Controversies are monitored and the investment manager engages where relevant using our sector and sustainability expertise, supported by the dedicated sustainability analyst. These are filtered, analysed and raised if material by the investment team regularly. Action plans may be recorded in these instances.

While shareholder voting rights are part of good governance, the team also considers the track record of board and management beyond traditional governance models in recognition of a strong relationship between founder led businesses supporting entrepreneurship which can also be optimal for shareholder returns. The Governance & Stewardship (G&S) Team is a central resource available to support investment teams on ESG engagement.

The investment manager exercises the voting rights on behalf of clients at meetings of all companies in which it has a holding. The only exception to this is meetings where share blocking or other restrictions on voting are in place.

To assist the team in assessing the corporate governance of investee companies, Janus Henderson subscribes to a third party independent proxy voting adviser. The proxy voting advisor provides voting recommendations based upon Janus Henderson’s corporate governance policies. Janus Henderson has a Proxy Voting Committee, which is responsible for the firm’s positions on major voting issues and creating guidelines overseeing the voting process. The Committee is comprised of representatives of investment 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

No index has been designated as a reference benchmark to meet the environmental or social objective promoted by this Financial Product.

M. Principal adverse impacts (PAI)

PAIs are considered at the 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.

 

The investment manager takes a pro-active approach to communicating views to companies and seeking improvements in performance and standards of corporate responsibility and governance and supports core principles such as disclosure, transparency and consistency, while promoting E and S.

The strategy has a dual mandate with a sustainable objective and promotes environmental and social characteristics via its portfolio commitments, for example on decarbonisation and board gender diversity.

We consider our approach to voting and engagement as ‘evidence-based’, systematic and pragmatic. These are reviewed using a variety of information and data taken either directly from the security issuer or from third parties (research providers, index providers, consultants). The following ESG data providers are used to inform our ESG analysis. We use a variety of information sources including security issuers and third-party research providers and consultants to rank and assess our investee companies. The main sources include:

■ MSCI ■ Sustainalytics ■ Bloomberg

■ Vigeo EIRIS ■ Institutional Shareholder Services (ISS) ■ RepRisk

Data thematic mapping is based on internal process and overseen by the FOGC using Bloomberg for additional revenue information.

As active managers with superb access to senior management, we take a pro-active approach to communicating views to companies and seeking improvements in performance and standards of corporate responsibility and core principles such as disclosure, transparency, and consistency. Each company held in the portfolio is reviewed in relation to its environmental social and governance risks as outlined in the following engagement framework.

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