Sustainable, Responsible &/or ESG Policy:

The Global Sustainable Equity Team (the ‘team’) aims to outperform the market over the long term through creating a differentiated global equity portfolio of the best sustainability ideas. The team’s investment approach is explicitly low carbon and by incorporating environmental, social, and governance factors into their analysis, they seek to construct a portfolio with a favourable risk profile.

The team believes there is a strong link between sustainable development, innovation, and long-term compounding growth. Our investment framework seeks to invest in companies that have a positive impact on the environment and society. At the same time, it helps us stay on the right side of disruption by avoiding companies we consider to be involved in activities that are harmful to the environment or society. We believe that this approach will provide clients with a persistent return source, deliver future compound growth, and help mitigate downside risk.

Key distinctions

30 years of sustainability thought leadership
We have a long and successful track record in the consistent application of our sustainability framework – strategy was launched in 1991 and Hamish Chamberlayne has been managing the strategy since January 2012. We have been thought leaders on sustainability issues since the inception of the strategy and were founding signatories of the UNPRI in 2006.

Investing with positive impact
Environmental and social considerations are integral to the investment philosophy and process, from universe definition and idea generation through to fundamental analysis, engagement, and portfolio management. A dedicated sustainability professional within the team enables deep integration of sustainability issues into investment process and enhances our ability to analyse issues from multiple angles.

Deep investment resource
The dedicated Global Sustainable Equity (GSE) portfolio management team works in collaboration with Janus Henderson’s global equity research platform and draws upon the deep knowledge and domain expertise of the sector and regional teams.

Explicitly low carbon
We consider six levels in our approach to low carbon investing. We believe this approach will be a significant source of alpha as the transition to the low carbon economy continues over the next decade and beyond. Hamish Chamberlayne has had training in climate change and has written a paper on the investment implications. The team have many years of experience in analysing, understanding, and managing both climate risk and transition risk within portfolios (the strategy has had this low carbon approach since inception in 1991).

Continuous improvement
We have a philosophy of continuous improvement that applies both to ourselves and the companies we invest in. We are always looking to enhance our understanding of evolving sustainability issues and how to incorporate them into our investment process. Our portfolio management is driven by this philosophy.

Our alignment with sustainable development

The guiding principle of our investment philosophy is: ‘Is the world a better place because of this company?’ and we always consider whether a company’s products contribute beneficially to the environment and society. Ten sustainable development investment themes help us identify long-term business opportunities. These have been informed by both the environmental and social megatrends that are pressuring the global economy, and by the UN’s 1987 Brundtland Report that defined sustainable development. Consequently, there is high alignment between our investment process and the UN Sustainable Development Goals (SDGs), and our portfolio contributes to all 17. Identifying companies that contribute towards the goals is inherent to our investment approach and we measure and report on this.

We believe there are a myriad of investment opportunities arising from the migration towards a more sustainable global economy, and that the best investment returns will be generated by companies that are on the right side of these. Looking for these long-term compounding characteristics and staying focused on long-term value not short-term valuation metrics, can generate exciting investment returns. We also believe there are substantial risks to companies and shareholder returns that come from factors such as asset obsolescence, regulatory risk, weak corporate cultures, or damaged franchises that are on the wrong side of ESG. While these risks can appear small in the short term, they also compound over time and can dramatically hurt company fundamentals.

Process:

Investment approach

There are four pillars to our sustainable investment process which incorporates both positive and negative selection criteria and includes both product and operational impact analysis. It is through this rigorous and repeatable stock-selection process that we believe we add value to our clients.

• Positive impact: Ten sustainable development themes guide idea generation and identify long-term investment opportunities.
• ‘Do no harm’: Strict avoidance criteria are adopted. We will not invest in activities that contribute to environmental and social harm. This also helps us avoid investing in industries most likely to be disrupted.
• ‘Triple bottom-line’ framework: Fundamental research evaluates how companies focus on profits, people, and the planet in equal measure.
• Active management and engagement: We construct a differentiated portfolio with typically high active share (>90%). Collaborative, continuous, and collective engagement is a key aspect of our process.

Thematic framework

The positive selection criteria lead the team 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 United Nations Sustainable Development Goals (SDGs) adopted in 2015.

Idea generation

Idea generation is derived from four ‘core’ megatrends that are pressuring the global economy: population growth, ageing populations, resource constrains, and climate change.

The team believes that the defining investment issue of our time will be transitioning to a low-carbon and sustainable economy, while maintaining the levels of productivity necessary to deliver the goods and services that an ageing and growing population requires. Derived from these four megatrends, we identify ten environmental and social sustainable development themes. For a company to be eligible for our portfolio at least 50% of its revenues will be aligned with at least one of these sustainable development themes.

Investing with positive impact is inherent in our approach and integral to all investment decisions. All investments must demonstrate positive impact and we measure and report on this. We do this by measuring the proportion of portfolio revenues that are aligned with each of our ten positive sustainable development themes; by mapping our portfolio holdings against the United Nations Social Development Goals (SDGs); by reporting our carbon footprint, and by measuring our portfolio against a set of ESG KPIs that are informed by the Global Impact Investing Network’s IRIS metrics.

Do no harm, avoidance criteria

The negative impact on global prosperity from the cost of economic externalities is becoming increasingly recognised. The team seeks to avoid businesses involved in activities contrary to the development of a sustainable economy, believing these types of business to be at a higher risk from government regulation or disruption.

We believe our exclusions make sense ethically, socially, environmentally, and financially.

All holdings 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. Additional oversight is provided by Janus Henderson’s ESG Oversight Committee, an independent committee comprising senior figures from across Janus Henderson, responsible for ensuring the strategy’s adherence to its exclusion criteria.

Fundamental and valuation analysis

The third pillar of the investment approach is constructed around two key questions, ‘Is the world a better place because of this company?’ and ‘Is there a large growth opportunity?’. The team have a rigorous fundamental research process looking at both ESG and financial factors in an integrated fashion. The team ultimately analyses every company based on the ‘3 Ps’ of their ‘triple bottom line’ framework: how they generate Profits, how they impact People; and how they impact the Planet.

The team seeks to identify businesses with long-term compounding characteristics, and with optionality upside, which are trading at discounts to their intrinsic value. Typically, the team looks for companies with the ability to generate and compound long-term free cash flows, where the equity market is currently under-valuing those. There is a specific focus to the financial analysis that the team does to identify intrinsic value.

The team looks for:

• The potential for multi-year revenue compounding▪
• A culture of innovation, that in turn drives that upside optionality
• Durable business models
• Greater predictability of revenues
• Consistency of margins and cash flows
• Strong balance sheets

The team also believes there are substantial risks to companies and shareholder returns from factors such as asset obsolescence, regulatory risk, the loss of key talent arising from weak corporate culture, or the loss of customers given the perception that a company operates on the wrong side of ESG. While these risks can appear small in the short term, they also compound over time and can dramatically hurt company fundamentals.

We believe that the equity market often fails to see both the long-term value being created by some companies and under-appreciates the long-term risks to others. We consider all these factors as we think about a business’ fair value and stay focused on the potential for long-term value creation rather than on shorter-term valuation metrics.

Active portfolio construction and risk management

Every stock selected for the portfolio must fit at least one theme; but for the purposes of portfolio construction, there is no forced distribution of themes. Portfolio construction is driven by stock selection, with each stock assessed within the disciplined analytical framework.

The portfolio is constructed with the aim of generating attractive excess returns, but with a good level of overall risk diversification. The intention is to construct a high-conviction portfolio with high active share against the benchmark. There are some key principles to this.

• Portfolio construction is driven by stock selection, with each stock being assessed within the disciplined analytical framework.
• The portfolio will be regionally balanced to avoid unintended country and currency risk. Emerging market investments will be limited to a maximum of 3% of the portfolio.
• The portfolio will comprise 50 to 70 equity investments. Every investment is selected on its own fundamental stock attributes but must contribute to overall portfolio fit and risk diversification.

The team believes that a high-conviction portfolio of stocks that align with the investment philosophy, which looks very different to the benchmark, but is managed with this high awareness of geographic, thematic and liquidity risk, can generate attractive risk-aware returns for our clients.

Sell discipline

Sales will be executed when the long-term investment thesis is impaired, or when corporate responsibility issues emerge and there is no possible resolution from engagement with the company. Additionally, a position will be sold if new information identifies a breach of the strategy’s avoidance criteria.

Engagement and reporting

Company engagement forms an important part of the investment process. We take an active approach to communicating our views to companies and seeking improvements in performance. We participate in various forms of engagement:

• Collaborative engagement: coming together with a group of other institutional investors to engage with companies on a range of ESG issues
• Continuous engagement: working with companies on ESG issues that have long-duration and do not result in immediate outcomes
• Collective engagement: bringing together ideas and resources from a diverse range of stakeholders from outside the organisation to engage with companies on key issues.

On a quarterly basis we publish our ‘Positive Impact Report’ and our ‘Voting & Engagement Report’. The Positive Impact Report details how the portfolio holdings are having positive environmental or social impact. The Voting & Engagement Report details our corporate engagement and proxy voting activity.

On an annual basis we publish our ‘Annual Sustainability Report’ and our ‘Investment Principles Report’. The Annual Sustainability Report details our portfolio impact measurement. We review the UN SDGs and our positive impact for each SDG. This report also discloses our portfolio Carbon Footprint, measuring scope 1, 2, and 3 emissions. The Investment Principles Report details our investment philosophy, our definition of sustainability, and an in-depth description of our positive impact themes and avoidance criteria.

Resources, Affiliations & Corporate Strategies:

As at 31 March 2024, Janus Henderson has 26 Responsibility Team resources. This centralised team are our ESG subject-matter experts who partner with our investment teams on ESG. On our investment teams, we have 11 dedicated ESG experts embedded within numerous investment teams. Additionally, we have 17 portfolio managers* on Janus Henderson’s Brighter Future (ESG-focused) Funds. Our portfolio managers are further supported by our central research functions and/or investment team analysts.

Source: Janus Henderson Investors, as at 31 March 2024.

ESG investment policy

ESG considerations are a key component of the active investment processes employed by our investment teams. These teams operate and are structured in ways most suited to their respective asset classes. Aside from expectations outlined under our ESG investment principles, the precise approach to and depth of ESG integration is down to the discretion and judgement of our investment teams, who apply their differentiated perspectives, insight and experience to identify sustainable business practices that can generate long-term value for investors. While the evaluation of our implementation of ESG criteria is carried out at the strategy level, our central Responsibility team supports each team in their ESG integration with data, tools, stewardship, and ESG research.

Stewardship is an integral and natural part of Janus Henderson’s long-term, active approach to investment management. Strong ownership practices such as management engagement can help protect and enhance long-term shareholder value.

We support a number of stewardship codes, such as the UK Stewardship Code, and broader initiatives around the world including the UN-supported Principles for Responsible Investment. We are pleased that the PRI has recognised the significant progress we’ve made in advancing our responsible investment capabilities over the last three years, and particularly in 2023. In 2023, we successfully remained a signatory to the Financial Conduct Authority’s UK Stewardship Code, regarded as a benchmark in investment stewardship.

In 2023, we implemented our revised ESG Investment Policy, which sets out our approach to ESG investing and ESG Governance and Oversight. The ESG Investment Policy highlights our core stewardship themes of climate change; diversity, equity, and inclusion; and corporate governance, and details baseline exclusions that apply on a firmwide basis.

Engagement policy

The Responsible Investment and Governance Team supports the investment teams on relevant ESG issues and developing themes. As long-term active investors, we regard voting and engagement as a means of promoting strong corporate governance, accountability and management of relevant ESG issues. The team proactively partners with investment desks to coordinate thematic engagements around our core sustainability themes of climate change, diversity, equity and inclusion (DE&I), and corporate governance. The team also engages on themes, such as land use, deforestation, human rights, and access to medicines.

Janus Henderson’s investment teams engage on a broad range of environmental issues that are most material to the companies and sectors in which they invest. In 2023, we recorded more than 1,000 company engagements with a distinct ESG component. Amongst other industry engagement networks in which we are involved, our relationship with Climate Action 100+ focuses on collective engagement on climate-related issues rather than divestment, and we’ve committed to the goal of ensuring the largest corporate greenhouse gas emitters take necessary action on climate change through our thematic engagements.

At Janus Henderson, we believe in the critical importance of diversity, equity and inclusion (DEI) both within our company and in the way we invest. As a result, DEI is embedded in our engagement process with companies, where we hold issuers accountable for their progress on DEI metrics.
Further information on our stewardship approach can be found in our most recent Impact Report and FRC UK Stewardship Report on the Janus Henderson ESG Resource Library.

Firmwide exclusions policy
Our firm-wide exclusions policy is to apply baseline exclusions for current manufacturer, or minority shareholding of 20% or greater in a manufacturer of:

• Cluster munitions
• Anti-personnel mines
• Chemical weapons
• Biological weapons

This policy is underpinned by our firmwide commitment to addressing sustainability issues through the support of our CEO, and existing engagement activities which have seen us drive change through active ownership.

Responsibility Team

The central Responsibility Team is a specialised in-house group focused on ESG data analysis and research, governance, ESG company and thematic engagement, and proxy voting and advisory services that serves as a resource for all our investment desks. They play a leading role in working with investment desks to enhance their ESG integration processes and externally leading our active participation in numerous ESG initiatives. The team also provides support to investment desks on understanding ESG and climate data and tools and occasionally presents to the wider investment floor on relevant topics such as climate change or culture. The team sits on the investment floor and is easily accessible to investment professionals.

In December 2022, we appointed Michelle Dunstan, an experienced leader in ESG strategy and investing, as Chief Responsibility Officer (CRO) to oversee our Responsible Investment strategy. To emphasise the importance of our responsibility efforts and embed them across our entire firm, the CRO reports directly to the CEO, provides quarterly reports to our Board of Directors on established metrics and targets, and sits on the firm’s Strategic Leadership Team.

In 2023, we added specialist resources to our central Responsibility team to better align our resourcing with our strategic priorities. The Responsibility team is centred around three focus areas:

Our ESG Strategy and Operations pillar supports our investment and non-investment teams in four areas - Strategic Initiatives (including responsible investing strategy, policy, and partnerships), ESG Data and Analytics, Content and Learning (including the development of training, reports, client responses, external communications, and ESG thought leadership), and Regulatory/Operations (collaborating with Regulatory, Risk, Compliance, and Legal).

Our Responsible Investment and Governance pillar provides direct support to our investment teams. The focus of this partnership is on equipping and supporting our analysts and portfolio managers to do what they do best: research industries and securities to select the most attractive candidates for inclusion in our portfolios. Our team will partner with the investment teams to deliver ESG training, support on developing frameworks to identify financial material ESG issues, planning and conducting engagements, supporting research on ESG issues that can impact cash flows or valuation, and advising on proxy voting.

Our ESG Solutions pillar focuses on partnering with our product, distribution, and investment teams to enhance existing portfolios and deliver new portfolios to clients across varying levels of ESG needs, from robust integration to ESG-focused strategies. They also partner with investment desks to continuously evolve our ESG capabilities, including developing and refining integration frameworks that inform research, stewardship, and portfolio construction. Furthermore, the team also contributes to thought leadership content and conducts training on various technical ESG topics.

Our Diversity and Community Relations pillar focuses on diversity, equity, and inclusion (DEI) and community relations. They are committed to fostering inclusion, promoting cultural awareness, and establish equitable policies, benefits, and training that support our people, and our DEI goals.

In Feb 2024, JHI’s ESG commitment level rating was upgraded by Morningstar from Low to Basic, where many of our peers are ranked. This is a very important development as many clients look to these ratings as evidence of our ESG capabilities. Furthermore, any individual fund’s ESG rating cannot be more than one notch higher than the firm-wide rating, so this will enable ESG rating upgrades to ‘Advanced’ for some of our strategies.

Investment Team Resources Dedicated to ESG Investment Research Analysis

Name - Job title
Alice Branagan - Portfolio Analyst - ESG
Artee Khiatani - Credit Analyst – ESG
Elizabeth Harrison - Fixed Interest Strategist – ESG
Jigar Pipalia - Portfolio Analyst
Kimberley Pavier - Sustainability Analyst
Michael Mullin, CFA - Jr Credit and ESG Analyst
Olivia Vernall - Research Analyst - ESG
Pauline Chrystal, CFA - Portfolio & ESG Manager
Soline Poulain - Credit Analyst
Suney Hindocha, CFA - Research Analyst
Taylor Conley - Junior ESG Research Analyst

Source: Janus Henderson Investors, as at 31 March 2024.

Responsibility Team

Name - Job Title
Michelle Dunstan - Chief Responsibility Officer
Antony Marsden - Global Head of Responsible Investment and Governance
Blake Bennett, PhD - Responsible Investment and Governance Analyst
Ruchi Biyani - Corporate Governance Lead
Olivia Gull - Responsible Investment and Governance Analyst
Charles Devereux, CFA - Responsible Investment and Governance Analyst
Charlotte Nisbet - Responsible Investment and Governance Analyst
Olivia Jones - Responsible Investment and Governance Analyst
Phoebe Lei - Responsible Investment and Governance Analyst
Xiaoyi Luo Tedjani, FRM - Responsible Investment and Governance Analyst
Catherine Boyd - Global Head of ESG Strategy & Operations
Onon Wedum - Responsibility Marketing & Communications Analyst
Jesse Verheijen - Head of ESG Data and Analytics
Evelyn Lin - ESG Data Analyst
Tom Nutton - ESG Data Analyst
Priyanshu Sinha - ESG Data Analyst
Nitin Mehta - Head of ESG Operations & Regulatory Change
Nicole Wong - ESG Risk and Controls Lead
Somya Gupta - Reporting Analyst
Sunniva Droenen - ESG Regulatory Business Analyst
Stewart Gillespie - JHI ESG Brighter Future Fund Equity Specialist
Adrienn Sarandi - Global Head of ESG Solutions and Strategic Initiatives
Henrik Jeppesen, CFA, CAIA, CIPM - ESG Implementation Director
Jonathan Lloyd - ESG Solutions Engineer
Demesha Hill - Head of Diversity & Community Relations
Ferhana Jameel - Diversity & Inclusion Advisor

Source: Janus Henderson Investors, as at 31 March 2024.

ESG governance and oversight

Governance and risk management process and participants
To reflect the increasing importance of sustainability and climate issues both to Janus Henderson as a corporate and as an asset manager in our investment process, we are continually enhancing the governance and oversight of these considerations.

Board of directors
While our Board of Directors has received updates on sustainability, climate and ESG issues in the past, formal oversight of these issues was formally put under the remit of the Governance and Nominations Committee in 2023. Our Chief Responsibility Officer is establishing tangible metrics with the Committee and will be providing quarterly updates on progress against those metrics. These metrics and discussion will encompass both Corporate Responsibility and Responsible Investing.

ESG oversight committees
Our ESG Oversight Committee, chaired by our Chief Responsibility Officer, provides oversight for a range of issues at a portfolio and security level, including monitoring of issuer-level positions for investments identified as having outsized sustainability, climate, or ESG risks. Its remit includes:

• Review of ESG-related metrics and commitments for new funds and mandates and changes to ESG related commitments to existing mandates
• Review of ESG-related processes, systems and resources in place for funds and mandates
• Review of the effectiveness of controls relating to sustainability
• Monitoring of key ESG-related metrics and exceptions

Risk management functions
Our Financial Risk team is an independent function reporting directly to the Chief Risk Officer, tasked with ensuring funds are managed in line with client expectations, and ensuring any exposures are appropriate. Its activities include market risk oversight, liquidity risk monitoring and counterparty credit risk management.

Beginning in 2023, the Financial Risk team further supports the investment desks in providing portfolio-level oversight of sustainability, climate, and ESG risks, using the Sustainability Risk Dashboard. Risk oversight meetings are held with investment desks regularly, with an agenda item to ensure climate-related portfolio risks have been identified.

ESG data management
At Janus Henderson, we continue to invest in leading ESG data and tools. Investment teams have access to a range of third-party data from providers including on ESG ratings, risks and controversies, business involvement, Climate Value at Risk (CVaR), climate risk reports, United Nations Sustainable Development Goals-alignment, and principal adverse indicators.

Janus Henderson makes third party and proprietary ESG data available directly to the investment teams.

Sources of ESG research, data and tools from providers, include:

• Sustainalytics
• MSCI
• Vigeo EIRIS
• ISS Climate Impact
• Institutional Voting Information Service (IVIS)
• RepRisk
• ISS Quality Score
• ISS Proxy Voting Research
• FTSE Russell Beyond Ratings
• TPI, CDP, IFRS Sustainability Alliance* (formerly SASB), CBI, SBTi
• GRESB
• Other specialist broker research

They also have access to climate data from our strategic data provider, MSCI, including:

• Carbon metrics
• Physical and transition risks assessments through climate scenario analysis
• Implied temperature rise
• Low carbon transition score

Our firm-wide proprietary portfolio ESG & Climate Dashboard shows portfolio-level analytics for the sustainability factors we believe to be most material for all sectors and companies. These factors include for corporates: environmental (inc. Scope 1, 2, and 3 carbon emissions and weighted average carbon intensity), social and governance (inc. board gender diversity), and those related to global norms (UN Global Compact violators). For sovereign issuers, we analyse a separate set of E, S, and G indicators, including those on greenhouse gas intensity, and scores on income inequality, freedom of expression, human rights, and corruption. It also identifies leader and laggard issuers to help uncover underappreciated risks and opportunities for the companies in which we invest. The new ESG Explore proprietary data solution will provide interactive, drill-down climate information to investment teams at both portfolio and security levels.

In collaboration with our fixed income and central equity research teams, we are in the process of creating an internal financial materiality map across sectors focused on environmental and social issues. Utilising existing materiality frameworks from SASB (Sustainable Accounting Standards Board) and MSCI, our research analysts, together with Responsible Investment team have identified 12 sustainability categories within environmental, human capital and social capital, which can materially influence the financial performance of companies across all sectors (not all companies nor sectors are influenced by every sustainability category). For each sector, we are developing a KPI page to be launched on our ESG Explore platform in the coming quarters. The KPI pages will include the selected financial material indicators by company or fund with the ability to compare to sector index averages and to other individual companies.

We continue to refine the integration of ESG into our investment processes, leveraging a wide range of data and tools, as well as well-respected initiatives such as the International Financial Reporting Standards (IFRS)* (formerly known as Sustainability Accounting Standards Board (SASB)), Science Based Targets initiative (SBTi) and the Transition Pathway Initiative (TPI), in addition to multiple ESG data vendors and artificial intelligence-based news platforms.

While our analysts and portfolios managers will be the primary users of these tools, they will also be used by our oversight functions, including risk, and for client reporting. These tools will enable our investment teams to conduct analysis of financially material ESG issues in a way that aligns with their current research process and in a similar way to how they access non-ESG issuer and portfolio data.

*Upon the Value Reporting Foundation’s consolidation into the IFRS Foundation, the IFRS Foundation’s International Sustainability Standards Board (ISSB) assumed responsibility for the SASB Standards. The ISSB has committed to build on the industry-based SASB Standards and leverage SASB’s industry-based approach to standards development. The ISSB encourages preparers and investors to continue to use SASB Standards.

Equipping our investment teams

We are enabling our analysts and portfolio managers to better identify and manage ESG risks and opportunities:

1. Enhancing data and analytics on ESG and climate risks and opportunities at security and portfolio levels
   We have augmented the range and quality of ESG data available to our investment teams and risk teams. We launched a proprietary dashboard that shows portfolio-level analytics for the most material sustainability factors. It also identifies leader and laggard issuers to help uncover underappreciated risks and opportunities for the companies in which we invest.
2. Supporting investment teams with expert resources and training
   We embarked on a campaign to upskill ESG knowledge and expertise. Over 90% of client-facing Distribution personnel have obtained an external ESG certification. All investment personnel associated with Funds in scope of the European SFDR took over four hours of mandatory ESG training, including on ESG metrics and financial materiality, climate data and scenario analysis, diversity, equity and inclusion, and human capital management. Specialised training on climate data and tools is available on demand. Janus Henderson continues to address ESG regulatory change. Requirements for the EU Sustainable Finance Disclosure Regulation and UK Task Force on Climate-related Financial Disclosure regulation have been implemented. We are currently working on addressing new regulations, including UK Sustainability Disclosure Requirements and the EU Corporate Sustainability Reporting Directive, and preparing for future regulations such as the US Securities and Exchange Commission Climate Disclosure rules and the European Securities and Markets Authority Fund Name rules.
3. Partnering with investment teams on proprietary ESG research, engagements, and insights
   Our Responsibility team partnered with our investment teams to develop thematic ESG research covering a wide range of topics, including nuclear energy, cybersecurity, regulation of internet mega caps, climate stress tests, and physical climate risks/renewable energy opportunities in real estate. Through close collaboration, we also significantly increased our engagement with issuers; 2023 saw over 1,000 documented ESG engagements across a variety of topics. For more information on our collaborative engagements, please see our UK Stewardship Code report (pgs. 50-52). We also voted on almost 64,000 proposals across almost 6,000 meetings.

ESG product strategy

Our ESG Product Strategy Team provides a centralised function to support all business functions with respect to ESG. This team partners with investment teams on content creation, client enquiries, and aligning our ESG product development and investment capabilities.
Additionally, our Head of Client Experience partners with ESG teams to develop detailed ESG reporting that satisfies the needs of our clients.

ESG research capabilities
Our central Responsibility team consists of ESG subject-matter experts and partners with the investment teams on research and engagement. This partnership leads to enhanced research and decision-making – marrying the sector and industry expertise of the Investment Teams with the ESG skills of the Responsibility Team.

In 2023, the Responsible Investment and Governance team conducted a series of thematic engagements covering a wide range of sectors and topics. These include water risks in the mining, beverage and semiconductor industries, methane/flaring from oil & gas industry, circular economy, and conduct and ethics of artificial intelligence.

ESG insights – Knowledge Shared

As part of our commitment to advancing the industry dialogue around ESG, we seek to make the thinking of our investment teams widely available to our clients, shareholders, and other stakeholders through a variety of content, including white papers, articles, podcasts, videos, and panel debates.

In 2023, we generated 28 thought leadership and educational pieces on ESG topics. The insights included our recent conference event hosted by Janus Henderson in October 2023, where analysts from Janus Henderson’s Responsible Investment and Governance team discussed their research of water-intensive sectors and the impact of growing water scarcity on businesses.

Our investment teams also produced broader papers and debates on ESG investment approaches, climate investing, the water crisis, natural capital and biodiversity loss, deforestation, methane emissions in the oil & gas sector, and the outlook for ESG investing.

JHI Brighter Future Funds

In 2023, product development work focused on strengthening Janus Henderson’s existing ESG product suite by delivering on product commitments and setting a foundation for future innovation. Driven by ongoing client interest, Janus Henderson continued to align products with the European Union’s Sustainable Finance Disclosure Regulation (SFDR). We converted 38 funds to Article 8 and 9 status as at the end of 2023.

Aside from delivering on regulatory-based product commitments, the Product and the Responsibility Teams conducted foundational work to define our ESG product suite in alignment with the investment objectives set out by the Responsibility Team and Chief Responsibility Officer, Michelle Dunstan. From a product perspective, we are committed to leveraging research-driven, materiality-focused ESG integration, alongside fundamental investment factors. This type of ESG integration is reflected in over 80% of Janus Henderson products.

Beyond ESG integration, we also understand that many clients are looking to pursue environmental or social outcomes, alongside targeted financial outcomes. For these clients, we continue to develop our suite of JHI Brighter Future Funds which aim to deliver superior financial outcomes as well as environmental or social outcomes aligned to long-term sustainability themes. Future developments for ESG-focused products will be based around understanding ESG opportunities across asset classes and key themes – with a particular focus on developing tools to understand how investment opportunities relate to the economy-wide climate transition.

Participating in select ESG industry initiatives

We have a strong heritage of involvement with sustainability-related organisations and initiatives. As part of our commitment to responsible investment, Janus Henderson is involved in a wide range of ESG-related initiatives as a member, supporter or in an advisory capacity.

In 2023, we joined Nature Action 100, a global investor-led initiative working to drive the necessary corporate action to reverse nature loss.

In 2023, we also participated in roundtables for the Assessing Sovereign Climate-related Opportunities and Risks (ASCOR) Project, which aims to develop a tool that assesses sovereign exposure to climate risk and how governments plan to transition to a low-carbon economy.

ESG affiliations, memberships, initiatives and certifications

In addition to being a founding signatory of the United Nations-supported Principles for Responsible Investment (PRI), Janus Henderson is involved in a wide range of ESG-related initiatives and working groups as a member, supporter or in an advisory capacity.

Our participation in industry working groups along with our sharing of insights and knowledge of ESG through our published materials reflects our status as an active proponent of sustainable investing.

For the full list of our ESG Affiliations, Memberships and Certification details please refer to the Affiliations section in our website.

https://www.janushenderson.com/en-gb/investor/about-us/esg-environmental-social-governance/esg-corporate/

In addition, we publicly support standard setters and industry groups who work with governments to implement stronger sustainability standards in the investment management industry. Where possible, we contribute to ESG policy and regulatory discussions through our response to consultations.
Thought Leadership

As part of our commitment to advancing the industry dialogue around ESG, we seek to make the thinking of our investment teams widely available to our clients, shareholders, and other stakeholders through a variety of content, including white papers, articles, podcasts, videos, and panel debates. As with our ESG research, we aim to publish content that contains thoughtful, practical, research-driven, and forward-looking insights.
In 2023, we generated 28 thought leadership and educational pieces on ESG topics. The insights included portfolio manager-specific views related to sustainable investment themes, with key contributions from our Global Sustainable Equities, Global Natural Resources, and Global Technology Leaders teams.

In terms of specific themes and topics, we produced broader papers and debates on a variety of ESG issues, including methane emissions from the oil & gas industry, deforestation, the role of metals in decarbonisation, renewable energy, and electric and autonomous vehicles. We also published articles outlining our approach to ESG and natural capital investing.

Dialshifter

This fund is helping to ‘shift the dial from brown to green’ by…

Built 30 years ago, the four pillars of our sustainable investment approach remain as pertinent today as they were three decades ago. It is these pillars which have enabled the strategy to remain at the forefront of sustainable investing for so long; as knowledge of sustainability has progressed, our investment approach has blossomed all the while remaining rooted in the strategy’s core beliefs. We consider this to be integral to the strategy’s success.

Our organisation is helping to support the Paris Climate Agreement and the Race to Net Zero by…

We have embedded climate change, including many aspects of the NZAMI framework, within our investment processes including the following:

• Maintaining Janus Henderson Carbon Neutral Status since 2007
• Founding signatory of the UN Principles for Responsible Investment in 2006.
• Signatory to the Paris Pledge for Action, announced prior to COP21
• Member of the Global Impact Investing Network, and the US, UK and European Sustainable Investment Forums
• Active engagement with portfolio companies on climate issues, including as a participant in Climate Action 100+, a five-year collaborative initiative led by investors to engage with the world’s largest corporate greenhouse gas emitters.

SDR Labelling: Sustainability Focus label

• Consumer Facing Disclosure