Janus Henderson Global Sustainable Equity (OEIC/Unit Trust)
SRI / Ethical Overview
Please Note: Due to the merger between Janus Capital Group and Henderson Global Investors this record is in the process of being updated.
Objective: To provide capital growth by investing primarily in a portfolio of global equities. The fund will seek to invest in global companies whose products and services are considered by the Investment Manager as contributing to positive environmental or social change and thereby have an impact on the development of a sustainable global economy. The fund will avoid investing in companies that the Investment Manager considers to potentially have a negative impact on the development of a sustainable global economy.
A thematic global growth fund with strict avoidance criteria. Ten sustainability themes drive the idea generation. The five environmental themes are Efficiency, Cleaner Energy, Water Management, Sustainable Transport and Environmental Services. The five social themes are Health, Knowledge & Technology, Quality of Life, Safety and Social Property & Finance. The fund managers employ a disciplined bottom up stock selection process which includes both detailed financial analysis and ESG analysis. The fund also has negative avoidance investment criteria which can be found on the fund website. A third party provider (Vigeo EIRIS) is used to implement the negative avoidance criteria.
SRI / themed / ethical assets under management – overview
As of 31.3.2017 Henderson had £962m in SRI strategies of which Nick and Hamish had responsibility for £783m.
- Fund Size (GBP): £534m at 31.3.2017
- Total value of SRI/ethical/environmental/ social/ environmental or sustainability themed funds under management: £962m at 31.3.2017
- Total value of assets covered by responsible ownership policy: All of Henderson’s £103.1bn in AuM is covered by the responsible ownership policy
- Total assets under management: Henderson had AuM of over £103.1bn at 31.3.2017
- AUM at 31.12.2017 - £651.7m
SRI Policies (Primary strategy in bold)
- Environmental policy Find investment funds with environmental policies - ie that consider issues such as pollution, climate change, resource management, environmental impact. This will include options from all of the different SRI Styles, including funds where their core strategy is to focus on other areas such as ethical funds. See fund information for fund specific policy details.
- Health & wellbeing policies Find ethical or sustainable investment fund options that have a policy which supports (ie aims to invest in) companies that are viewed as offering positive lifestyle, health or wellbeing related benefits.
- Limits exposure to carbon intensive industries Find environmental, sustainable investment, ethical fund and other options that aim to significantly reduce or limit exposure to carbon intensive industries (ie sectors which are major contributors to climate change). Funds vary - strategies may involve excluding sectors such as coal, oil & gas, mining or airlines - or may indicate a 'best in sector' approach is taken. See fund literature for details.
- Measures positive impacts Find funds that measure the positive effect of their investment decision making on society and/or the environment. (This may involve eg carbon saved or jobs supported.) Managers aim to quantify the benefits they deliver (relative to other strategies or other benchmarks) to ensure they are delivering positive benefiting. This is a new and evolving area. See fund literature for information
- Sustainability policy Find fund options that consider issues relating to the sustainability agenda (e.g. resource management, environmental impact, climate change and/or social issues such as equal opportunities, human rights and adherence to recognised codes). This will include funds from all of the different SRI Styles. See fund information for explanations of the different strategies.
- Ethical policies Find funds with 'traditional' ethical investment policies. These typically focus on avoiding companies that are involved in the armaments industry, tobacco, gambling and/or pornography. Options will include funds where their core strategy or style may be to focus other issues - like sustainability or the environment, not just 'ethical funds'. Strategies vary significantly. Check fund literature for details.
- Social policy Find fund options that consider social issues (e.g. human rights, labour standards, equal opportunities, child labour and adherence to internationally recognised codes such as the UN Global Compact). This will include funds in most of the different SRI Styles as this is considered a core issue. See fund information for detail.
- Governance policy Find fund options that have policies that relate to corporate governance issues such as board structure, executive remuneration, bribery and/or corporate corruption. These funds will typically avoid companies with poor practices.
- Animal welfare policy Find ethical fund options that have policies that require specific animal welfare standards to be adopted by investee companies in order for them to be considered for inclusion within the fund.
- Nuclear exclusion policy Find ethical funds (and other options) that have a published policy that sets out the fund's position on avoiding or limiting exposure to nuclear power. See fund literature for details of their policy.
- Animal testing exclusion policy Find ethical investment options that avoid companies that are involved in testing their products on animals. Ethical fund strategies vary - some exclude all companies that test on animals, others allow companies that test for medical purposes or where required by law. Read fund details for fund specific information.
- Tobacco production avoided Find fund options that exclude manufacturers of tobacco (or related) products. This typically relates to ethical funds however funds from other SRI Styles commonly avoid this area also. Strategies vary and funds may invest in retailers of such products (e.g. supermarkets or hotels.) See fund information for further information.
- Armaments manufacturers avoided Find ethical fund (and other SRI) options that avoid avoids companies that manufacture products intended specifically for military use. Fund strategies vary - particularly with regard to non strategic military products. Read fund literature for specific details.
- Coal, oil &/or gas majors excluded Find sustainable investment and ethical fund options that avoid significant involvement in coal, oil and/or gas producing companies. Funds vary. See individual fund literature to confirm details.
- Climate change / GHG policy Find sustainable investment and ethical fund options that pay significant attention to climate change related issues such as greenhouse gas/carbon emissions. Strategies vary, see fund literature for individual fund information.
- Invests in clean energy/renewables Find ethical, sustainable investment and other environmentally aware fund options that aim to invest in companies in the clean technology and renewable energy sectors. Fund strategies vary. Some funds may have limited exposure to this area, others may have significant exposure. Check fund literature for details.
- Alcohol production excluded This filter helps you to find ethical funds - and other options - that avoid investment in alcohol production. See fund literature for further information.
- Fracking and tar sands excluded Find fund options that avoid companies involved in fracking and tar sands - which are widely regarded as more controversial methods of oil and gas extraction.
- Gambling avoidance policy Find ethical fund options (and other options) that avoid companies with significant involvement in the gambling industry. See fund policy for details.
- Pornography avoidance policy Find ethical fund option - and in some cases other options - that avoid companies that derive significant income from pornography. See fund details for further information.
- Human rights Find funds that consider human rights practices when approving companies for investment. Such funds will require decent standards of human rights to be demonstrated - which typically means adherence to international norms as a minimum standard.
- Positive selection bias Find funds where their main 'ethical approach' is to invest in companies that are considered to be positive/good or useful to people and/or the environment. The fund may also have negative avoidance criteria - see fund details to read more about fund strategies.
- Balances company 'pros and cons'/best in sector Find ethical funds and other options that consider both the 'positive' things companies do and the 'negative' things they do in order to make balanced, often complex decisions about where they might invest. Such funds often invest in the best/most ethical companies across most industries ('best in sector'), rather than excluding entire sectors. The fund manager may combine this with 'responsible engagement' activity to encourage better business practices. See fund literature for specific policy explanations.
- Eurosif transparency Find funds that meet the standards of the EUROSIF transparency Code. This means that they are a leading fund in terms of openness and transparency, publishing - for example - extensive information about where they invest and how they deal with companies.
- Over 50% large cap Find funds that invests more than half of their money into what are commonly regarded as 'large companies'. This will typically mean that the market capitalisation (or value) of the companies they hold is in excess of £5 to £10 billion.
- Sustainability themed Find funds where there is a significant emphasis on sustainability issues either as its primary strategy or as a core strategy that compliments other criteria. (This may apply to a number of different SRI Styles). Such funds will consider environmental and social issues when making stock selection decisions. Read fund literature for further information.
- Favours cleaner, greener companies Find funds that aim to nvest in companies with strong environmental policies and practices. This may mean it invests in smaller companies offering market leading environmental services or products and/or larger companies that are working towards the improved management of their negative impacts. Read fund literature for further information.
- Favours companies with strong social policies Find funds that invest in line with positive strategies that relate to 'people' issues - such as having strong human rights, labour standards and equal opportunities practices. Such funds are likely to invest in companies that have market leading standards with regard to employee and supplier practices. Read fund literature for further information.
- Faith friendly Find funds that have attributes that commonly suit the aims of investors of faith - although they may not be specifically marketed as being only for religious investors. Strategies vary (as do investor aims). Read fund literature for further information.
- Strictly screened ethical fund Find funds that have a high level of negative ethical avoidance. These funds are likely to exclude more companies than other ethical (and SRI) fund options. Read fund literature for further information.
- Aims to generate positive impacts Find funds that aim to help deliver positive social or environmental impacts or outcomes through their investment decisions - which typically involves holding companies that are viewed as being necessary or beneficial. Strategies and approaches vary. A small number of funds have recently started to measure outcomes (see 'Measures Impacts' in the Policy filter). This is a new area - so most funds do not do this yet. See fund literature for further information.
- Available via an ISA Find funds that are available via a tax efficient ISA product wrapper
- Clean energy themed Find funds that in clean technology / clean energy companies. See fund information for further details.
- ESG/SRI engagement Find funds and fund management companies that actively encourages higher 'environmental, social and governance' and/or 'sustainable and responsible investment' practices amongst investee companies - when positive change is aligned with the best interest of investors. This may apply to a single fund or a group of funds. Read fund literature for further information.
- Responsible Ownership policy for non SRI funds Find funds run by fund managers that apply Responsible Ownership or 'Stewardship' policies to all or most of their investment assets. This means that active involvement (e.g. voting, dialogue) with the companies they invest in across funds (not normally limited to ethical or SRI options.) Read fund literature for further information.
- Integrates ESG factors into all/most fund research Find fund management companies that research environmental, social and governance (ESG) issues when deciding whether or not to invest in a company. This typically applies to all funds, not only those which are promoted as being 'ethical' or 'SRI themed'. This is increasingly often used as a risk management tool.
- Vote all shares at AGMs/EGMs This fund manager always votes the shares they own at annual general meetings (and extraordinary general meetings). This is a key indicator of 'responsible share ownership' and companies taking an interest in the future of the companies they part own.
- In house responsible ownership/voting expertise Find fund / fund management companies where there is in-house expertise that enables the fund manager to make their own decisions on issues such as shareholder voting, setting of in-house guidelines - for example - particularly with regard to environmental, social and governance (ESG) issues.
- Responsible Ownership/ESG a key differentiator The fund managers have said they consider this area to be a key differentiator for their business
- UK Stewardship Code signatory Find fund managers that are signatories to the FRC UK Stewardship Code, which sets out a framework for constructive investor / investee relations where fund managers are encouraged to behave as responsible 'company owners'.
- Publish Responsible Ownership/Stewardship report Find fund management companies that publish information on their approach to responsible investment ownership - also known as 'Stewardship' - following the introduction of 'the Stewardship Code'. This sets out their approach to voting, dialogue with company management and any related activity. This is publicly available.
- Publish full voting record Find fund management companies that publishes a full record of how they vote at AGMs and EGMs. This information is publicly available.
- Review(ing) carbon/fossil fuel exposure for all funds Find funds / fund managers that are reviewing or have reviewed their exposure to carbon intensive industries including (but not only) mining, oil and gas companies. This work is being carried out in the context of climate change related concerns, and may often reference international agreements.
- PRI signatory Find fund management companies that have signed up to the UN backed 'Principles of Responsible Investment' initiative.
SRI / Ethical Policy
The Global Care Growth fund employs an integrated approach to sustainable and responsible investment (SRI), combining positive and negative investment criteria, and considering both the products of a business (what it does) and the operations (how it does it).
Positive selection criteria
The positive criteria lead the managers to invest in businesses that have a positive impact on society and the environment by virtue of the products or services they sell, and by the way in which they manage their operations, thereby supporting the Sustainable Development Goals adopted by the United Nations in 2015.
The managers use a thematic framework to identify those businesses that are strategically aligned with the four megatrends of climate change, resource constraints, population growth and an ageing population, and by virtue of this offer the potential for sustainable revenue growth. Derived from the four megatrends, the fund has ten sustainability themes of which five are environmental and five are social. For every investment it must be possible to identify at least one of the following themes as a value driver to the business. For a more detailed explanation of our themes please refer to our Ten themes for sustainable investment document. https://az768132.vo.msecnd.net/documents/54768_2016_10_31_12_54_12_860.gzip.pdf.
Five environmental themes: Cleaner Energy, Sustainable Transport, Water Management, Environmental Services, Efficiency
Five social themes: Health, Sustainable Property & Finance, Knowledge & Technology, Safety, Quality of Life
Environmental, social and governance (ESG) research is undertaken for all investments. The managers believe companies with sound governance practices and strong stakeholder relations, that manage relevant environmental and social risks responsibly, have a greater propensity to create sustainable value for shareholders.
Company engagement forms an important part of the investment process. Meetings incorporate a
wide range of topics including environmental and social issues where relevant. The managers take an active approach to communicating their views to companies and seeking improvements in performance, including appropriate standards of corporate responsibility.
In many ways the negative criteria are a reflection of the positive criteria. The fund seeks to avoid those businesses that stand to be disrupted by the environmental and social megatrends (and that therefore have unsustainable business models), and also avoid those that are involved in activities regarded as being contrary to the development of a sustainable economy and harmonious society.
All holdings in the fund are compliant with the UN Global Compact, whose Ten Principles cover human rights, the International Labour Organisation’s declaration on workers’ rights, corruption and environmental pollution.
Further detail can be found on the fund’s website: https://www.henderson.com/ukpi/fund/92/henderson-global-care-growth-fund.
Resources, Affiliations & Corporate Strategies
INTERNAL research resources
The Global Sustainable & Responsible Investment team has access to research conducted by Henderson’s wider team of investment professionals via the Henderson Research Hub. The Governance and Responsible Investment (GRI) team also provide advice and guidance on a range of ESG issues affecting existing and potential fund investments, market trends and development of ESG themes. The GRI team also assists with engaging with company management on ESG issues.
Global Sustainable & Responsible Investment team
As part of the team’s research process, research is sourced from company meetings, company financial statements and also sell-side analysts. The investment team integrates ESG considerations into investment decision making and ownership practices. They undertake an evaluation of each investee company’s business and workplace standards, social impact, and corporate stewardship. They believe that sustainability and corporate responsibility (CR) plays a vital role in the long-term performance of a company.
The in-house GRI team works closely with the investment managers to assist in identifying and analysing ESG issues. As part of the investment team’s detailed fundamental research, new investments have a checklist which includes areas such as the quality of the management/business standards to assess the return potential of the investment. Companies assessed for inclusion in the portfolio must demonstrate acceptable management of long-term strategic risks and opportunities.
EXTERNAL research resources
Vigeo EIRIS is the main source of management for the Funds’ exclusion criteria. Vigeo EIRIS is one of the largest sustainable, responsible and ethical research companies globally. The Vigeo EIRIS research team covers over 3,000 companies and provides the managers with detailed reports into a company’s activities, to ensure adherence to the Fund’s strict ethical criteria. Should an investment idea not be covered already, then Vigeo EIRIS conduct bespoke research on behalf of the portfolio managers.
Other sources of external research are:
- MSCI, ISS, RepRisk, IVIS, CDP, TruCost, HOLT
- Stock broker research
- Strategist research
External resources such as MSCI and TruCost are used to populate the team’s monthly ESG exposure, benchmarking and risk monitoring report. This report shows the exposure of the portfolio to companies’ rated highest risk for environmental & social performance, ESG controversies, corporate governance issues and carbon exposure relative to the fund’s benchmark.