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

B. No Sustainable Investment Objective

This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.

C. Environmental or social characteristics of the financial product

The Fund promotes climate change mitigation, support for the UNGC Principles (which cover matters including human rights, labour, corruption, and environmental pollution). The Fund applies proxy voting and engagement in line with the Investment Manager’s policy which can be found here. The Fund seeks also to avoid investments in certain activities with the potential to cause harm to human health and wellbeing or the environment by applying binding exclusions. The Fund does not use a reference benchmark to attain its environmental or social characteristics.

D. Investment Strategy

This Fund to seeks capital growth through investment in the global equity market and specifically through exposure to technology related securities. Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the section ‘Funds’ of the Prospectus).

Companies that the Investment Manager believes may be facing potential environmental or societal issues are subject to active engagement, the exercise of voting rights, and the proposal of action plans (where appropriate), in order to identify sustainability risks and help influence remedial change.

If the Investment Manager has concerns that a company is failing to sustain appropriate environmental and/or social credentials, it will take appropriate remedial actions, which may include engagement or divestment.

The binding elements of the investment strategy described below are implemented as exclusionary screens within the Investment Manager’s order management system utilising third-party data provider(s) on an ongoing basis.

The companies in which investments are made 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 importance to the assessment of corporate culture, values, business strategy, board diversity, audit, and controls. 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 85% of the investments of the financial product are used to meet the environmental or social characteristics promoted by the financial product. Other assets 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 investment of the financial product used to meet the environmental or social characteristics promoted by the financial product are direct investments in investee companies.

F. Monitoring of environmental or social characteristics

The attainment of the environmental and social characteristics of the fund is measured via the below listed sustainability indicators.

• Carbon – Carbon Intensity Scope 1&2
• Carbon – Carbon Footprint Scope 1&2
• Overall UNGC Compliance Status
• Number of companies engaged with in line with the Investment Manager’s engagement approach
• ESG Exclusionary screens – see “Methodologies for environmental or social characteristics” below for details on the exclusions.

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 8 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 for environmental or social characteristics

The Investment Manager applies screens to exclude direct investment in issuers based on their involvement in certain activities. Specifically, issuers are excluded if they have any involvement with chemicals of concern or derive more than 5% of their revenue from the production of fossil fuels, nuclear weapons, tobacco, fur, alcohol, civilian armaments, intensive farming, nuclear power, gambling, pornography and animal testing (excluding medical testing).

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.

For the purposes of the AMF doctrine, the extra-financial analysis or rating is higher than:

1. 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.
2. 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 assesses each company held by the Fund in relation to its impact on the environment and society in addition to an analysis of the governance risks it exhibits.

The Investment Manager may include positions in the Fund that, based on third-party data or screens, appear to fail the above 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 Investment Manager applies screens to exclude direct investment in issuers based on their involvement in certain activities. Specifically, issuers are excluded if they have any involvement with chemicals of concern or derive more than 5% of their revenue from the production of fossil fuels, nuclear weapons, tobacco, fur, alcohol, civilian armaments, intensive farming, nuclear power, gambling, pornography and animal testing (excluding medical testing).

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 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 8 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, while promoting E and S.

See Janus Henderson’s ESG Investment Policy at www.janushenderson.com and the 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.

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. Designated Reference Benchmark

No index has been designated as a reference benchmark to meet the environmental or social characteristics promoted by this Article 8 Financial Product.

M. Principal adverse impacts (PAI)

PAIs are considered at the product level.¹ The table below sets out where PAI is considered through the use of exclusionary screens:

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.

'Where the translated version of this disclosure text differs from the English version, the original English version prevails'