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.
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;
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.