Status under the EU Sustainable Finance Disclosure Regulation (SFDR) – Pan European Smaller Companies Fund

Janus Henderson Horizon Fund – Pan European Smaller Companies 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, avoiding issuers with a high carbon intensity and which do not have a credible transition strategy, and support for the UNGC 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 Investment Manager’s order management system utilising a third-party data provider 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 Investment Manager is a signatory to the UN Principles for Responsible Investment (UNPRI).

A minimum of 75% of the investments of the financial product are used to meet the environmental or social characteristics promoted by the financial product.

All investments of the financial product that are used to meet the environmental characteristics promoted by the financial product are direct investments.

The sustainability indicators used to measure the attainment of each of the environmental or social characteristics promoted by this financial product are:

• Carbon – Carbon Intensity Scope 1&2
• Overall UNGC Compliance Status
• % Issuers within the portfolio identified as having a credible transition strategy in accordance with the Investment Manager’s proprietary methodology.
• ESG Exclusionary screens – see “G. Methodologies for environmental or social characteristics?” below for details on the exclusions.

The Investment Manager applies screens to exclude direct investment in issuers based on their involvement in certain activities.

The Fund also applies the Firmwide Exclusions Policy, which includes controversial weapons, as detailed under paragraph 10.15 of the section entitled “Investment Restrictions” to the Prospectus.

The Investment Manager may invest in issuers with a high carbon intensity¹ (other than those excluded as described above) if it determines that such issuers have a credible transition strategy, based on its proprietary methodology described below.

The Fund has chosen MSCI’s ESG Manager 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.

Positions allocated may be estimated or reported data received from the external data vendor. For positions not covered by the external data provider, proprietary research may be used. The appropriateness of the evidence provided is assessed by an independent body at JHI.

Data coverage is directly driven by the coverage of the underlying ESG Data Provider.

JHI’s internal data structure provides sufficient flexibility to incorporate proprietary evidence or adapt evaluations to future requirements.

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.

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.

The Firm supports a number of stewardship codes and broader initiatives around the world and is a signatory to the UK stewardship code.

Janus Henderson has a Proxy Voting Committee, which is responsible for establishing positions on major voting issues and creating guidelines overseeing the voting process.