Status under the EU Sustainable Finance Disclosure Regulation (SFDR) – Global Property Equities Fund
Janus Henderson Horizon Fund – Global Property Equities Fund
Legal entity identifier:213800JUO8N42HYG8F65
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 10% 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 through the adoption of GHG emission reductions targets and support for the UN Global Compact 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 10% 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 capital growth through investment in the global equity markets and specifically through exposure to property related securities. The binding elements of the investment strategy described below are implemented as exclusionary screens which are coded into the compliance module of the Investment manager’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 advisor to block any proposed transactions in an excluded security and identify any changes to the status of holdings when third-party data is periodically updated.
One binding criteria – “exclude direct investment in Prison Real Estate Investment Trusts (REITS)” is not available as automated data points and is evidenced by external or in-house research.
The Investment Manager uses specific screens to help achieve some of the promoted characteristics. For example- to promote climate change mitigation, screens are applied to avoid investment in certain high carbon activities, and it is expected that this will result in the fund having a lower carbon profile. Another example is that to promote support for the UNGC Principles, screens are applied so that the Fund does not invest in issuers that are in breach of the UNGC Principles based on third party data and/or internal research.
The Investment Manager applies screens to exclude direct investment in Prison Real Estate Investment Trusts (REITS). Issuers are also excluded if they are deemed to have failed to comply with the UN Global Compact Principles (which cover matters including human rights, labour, corruption, and environmental pollution). Further, the Investment Manager uses a pass/fail test to determine investments which are deemed sustainable investments, meaning that each holding must meet all three of the requirements below:
- based on revenue mapping to UN Sustainable Development Goals or having a carbon emissions target approved by the Science Based Targets initiative (SBTi), it contributes to an environmental or social objective;
- it does not cause significant harm to any environmental or social sustainable investment objective; and
- it follows good governance practices.
The Investment Manager actively engages with companies to encourage the adoption of science-based emission targets, or a verified commitment to adopt science-based emissions targets1. The Investment Manager commits a minimum of 10% of companies within the portfolio having approved or committed targets and will monitor the progress of those companies against those targets.
For the purposes of the AMF doctrine, the extra-financial analysis or rating as described above is higher than:
- 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.
- 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.
The Investment Manager may only invest in companies that would be excluded by the screens described above if the Investment Manager believes, based on its own research and as approved by its ESG Oversight Committee, that the third-party data used to apply the exclusions is insufficient or inaccurate.
The Investment Manager may consider that the data is insufficient or inaccurate if, for example, the third-party data provider research is historic, vague, based on out of date sources, or the investment manager has other information to make them doubt the accuracy of the research.
If the Investment Manager wishes to challenge the third-party data, then the challenge is presented to a cross-functional ESG Oversight Committee who must sign off on the “override” of the third-party data.
If a third party data provider does not provide research on a specific issuer or excluded activity, the Investment Manager may invest if, through its own research, it is satisfied that the issuer is not involved in the excluded activity.
1.Approved or verified by SBT – https://sciencebasedtargets.org/ or equivalent
The Fund also applies the Firmwide Exclusions Policy (see “Firmwide Exclusions” in the "JHI Responsible Investment Policy”), which includes controversial weapons.
JHI has chosen MSCI 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 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 JHI Responsible Investment Policy, which incorporates JHI’s Sustainability Risk 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.