Status under the EU Sustainable Finance Disclosure Regulation (SFDR) – Global Real Estate Equity Income Fund
Janus Henderson Capital Fund – Global Real Estate Equity Income Fund
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.
A. Summary
This financial product promotes environmental or social characteristics but does not have as its objective sustainable investment.
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. The Fund does not use a reference benchmark to attain its environmental or social characteristics.
The binding elements of the investment strategy described below are implemented as exclusionary screens within the Sub-Investment Adviser’s order management system utilising third-party data provider(s) on an ongoing basis.
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”).
In addition, the Sub-Investment Adviser is a signatory to the UN Principles for Responsible Investment (UNPRI).
A minimum of 90% of the investments of the financial product are used to meet the environmental or social characteristics promoted by the Fund.
The sustainability indicators used to measure the attainment of each of the environmental or social characteristics promoted by this financial product are:
- Overall Global UN Compact Compliance Status.
- % of portfolio: issuers with science-based emission targets, or a verified commitments to adopt science-based emissions targets1.
- ESG Exclusionary screens - see “G. Methodologies for environmental or social characteristics?” below for details on the exclusions.
The Sub-Investment Adviser applies screens to exclude direct investment in Prison Real Estate Investment Trusts (REITS). Companies are also excluded if they are deemed to have failed to comply with the UN Global Compact Principles.
The Sub-Investment Adviser actively engages with companies to encourage the adoption of science-based emission targets, or a verified commitment to adopt science-based emissions targets.
The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under the Prospectus section entitled “Investment Restrictions”.
The JHI real estate team are selective in identifying data providers, preferring to utilise inputs principally from real estate specialist third party data providers such as GRESB, ICE and EPRA, alongside JHI’s chosen ESG (Environmental, Social and Governance) provider MSCI to inform their proprietary ESG framework.
Where exclusions data is not available or the investment team disagrees with the assessment, the teamwork with an independent oversight body at JHI to validate the assessment.
The team’s proprietary framework relies heavily on their real estate expertise in the assessment of material issues and considers frameworks such as SASB.
For the purposes of exclusionary screens for binding criteria, where there is data missing, evidence will be presented to an independent oversight body at JHI.
The JHI Sustainability Risk Policy sets out the firmwide ESG Integration Principles, Sustainable Investment Principles and Baseline Exclusions applied to investee companies.
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 Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code. Details of JHI’s approach to Engagement can be found in the ‘ESG Investment Policy’ published under the ‘ESG Resource Library’ on the Janus Henderson website.
Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process.
1Approved or verified by SBT-https://sciencebasedtargets.org/ or equivalent.
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 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. The Fund does not use a reference benchmark to attain its environmental or social characteristics.
D. Investment Strategy
This Fund seeks income returns in excess of the benchmark with potential for capital growth through investment in the global markets and specifically through exposure to property related securities.
Investors should read this section in conjunction with the Fund’s investment strategy (as set out in the supplement for the Fund under the heading “Investment Objective and Policies”).
The binding elements of the investment strategy described below are implemented as exclusionary screens within the Sub-Investment Adviser’s order management system utilising third-party data provider(s) on an ongoing basis. One binding criterion - “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 companies in which investments are made are assessed by the Sub-Investment Adviser 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 Sub-Investment Adviser 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 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 Sub-Investment Adviser 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 90% of the investments of the financial product are used to meet the environmental or social characteristics promoted by the Fund. 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 investments of the financial product that are used to meet the environmental characteristics promoted by the financial product are direct investments.
F. Monitoring of environmental or social characteristics
The sustainability indicators used to measure the attainment of each of the environmental or social characteristics promoted by this financial product are:
- Overall Global UN Compact Compliance Status
- % of portfolio: issuers with science-based emission targets, or a verified commitments to adopt science-based emissions targets
- ESG Exclusionary screens - see “ Methodologies for environmental or social characteristics?” below for details on the exclusions.
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 ensure that ESG-related activities are managed in line with regulatory requirements and expectations, and considered within our compliance framework.
G. Methodologies for environmental or social characteristics
The Sub-Investment Adviser applies screens to exclude direct investment in Prison Real Estate Investment Trusts (REITS). Companies 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).
The Sub-Investment Adviser actively engages with companies to encourage the adoption of science-based emission targets, or a verified commitment to adopt science-based emissions targets1. The Sub-Investment Adviser commits to 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.
The Fund also applies the Firmwide Exclusions Policy [link], which includes controversial weapons, as detailed under the Prospectus section entitled “Investment Restrictions”.
For the purposes of the AMF doctrine, the extra-financial analysis or rating 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 Sub-Investment Adviser may include positions in the Fund that, based on third-party data or screens, appear to fail the above criteria, where the Sub-Investment Adviser believes that the third-party data may be insufficient or inaccurate.
1approved or verified by SBT- https://sciencebasedtargets.org/ or equivalent
H. Data sources and processing
The JHI real estate team are selective in identifying data providers, preferring to utilise inputs principally from real estate specialist third party data providers such as GRESB, ICE and EPRA, alongside JHI’s chosen ESG (Environmental, Social and Governance) provider MSCI to inform their proprietary ESG framework.
Binding criteria applied to the fund to avoid investment in non-conforming companies and promote environmental characteristics are applied using MSCI. 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.
The team’s targeted ESG approach, focuses on Materiality, Data Quality and Dispersion when considering relevant factors. The team have conducted extensive on desk analysis to ensure confidence of data quality in selection of data providers. Where exclusions data is not available or the investment team disagrees with the assessment, the teamwork with an independent oversight body at JHI to validate the assessment. Depending on data availability, monthly and/or annual data feeds from several third-party data suppliers are downloaded by the investment team. The central JHI ESG team support across some of the data processes.
The proportion of data for a Financial Product that is estimated is constantly evolving.
I. Limitations to methodologies and data
The team’s proprietary framework relies heavily on their real estate expertise in the assessment of material issues and considers frameworks such as SASB. We recognise the limitations of scoring of complex issues with imperfect data, disclosures and varying methodologies. We feel active management and deep sector expertise are crucial to navigate this alongside the application of a robust and consistent process.
For the purposes of exclusionary screens for binding criteria, where there is data missing, evidence will be presented to an independent oversight body at JHI as described above.
J. Due diligence
As detailed in the above ‘Methodologies for Environmental and Social Characteristics’ section, the Sub-Investment Adviser applies screens to exclude direct investment in Prison Real Estate Investment Trusts (REITS). Companies 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).
The Sub-Investment Adviser actively engages with companies to encourage the adoption of science-based emission targets, or a verified commitment to adopt science-based emissions targets1. The Sub-Investment Adviser commits to 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.
The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under the Prospectus section entitled “Investment Restrictions”.
For the purposes of the AMF doctrine, the extra-financial analysis or rating 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 Sub-Investment Adviser may include positions in the Fund that, based on third-party data or screens, appear to fail the above criteria, where the Sub-Investment Adviser believes that the third-party data may be insufficient or inaccurate.
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. Investment Compliance ensure that ESG-related activities are managed in line with regulatory requirements and expectations and considered within our compliance framework.
K. Engagement Policies
In addition to the binding elements of the investment strategy described above, stewardship forms an integral and natural part of the team’s investment approach as active investors with investment specialists engrained in local markets.
The Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code. Details of JHI’s approach to Engagement can be found in the ‘ESG Investment Policy’ published under the ‘ESG Resource Library’ on the Janus Henderson website.
Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process. The Committee is comprised of representatives of investments 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.
Principal Adverse Impacts (PAI)
| Adverse Sustainability Indicator | Metric | How is PAI considered | |
|---|---|---|---|
| Greenhouse gas emissions | GHG emissions | Scope 1 GHG emissions | Through engagement with companies |
| Scope 2 GHG emissions | Through engagement with companies | ||
| Carbon footprint | Carbon footprint | Through engagement with companies | |
| GHG Intensity of investee companies | HG intensity of investee companies | Through engagement with companies | |
| 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 31 October 2022 and periodic reporting will commence from 1 January 2023 for the first reference period from 31 October 2022.
'Where the translated version of this disclosure text differs from the English version, the original English version prevails'