Amongst other characteristics, the Fund promotes environmental and social characteristics and invests in companies that apply good corporate governance. JOHCM Funds (Ireland) Limited, the Fund’s manager has therefore categorised the Fund as meeting the provisions set out in Article 8 of EU Regulation 2019/2088 on sustainability-related disclosures in the financial services sector (“SFDR”).
In looking for investments, J O Hambro Capital Management Limited (“Investment Manager”) seeks to avoid investing in companies which contribute to significant social and/or environmental harms, and thereby fail environmental, social and governance (“ESG”) key performance indicators which are directly integrated within all aspects of the investment process.
In order to achieve this, the Fund applies exclusions to the selection of underlying assets as part of its investment process, including an exclusion for businesses that are rated as ‘Severe’ by Sustainalytics, ‘CCC’ by MSCI ESG or assessed as ‘non-compliant’ with the UN Global Compact.
In order to support the reduction of adverse environmental impacts of the Fund’s portfolio, and in particular its contribution to climate change, the Investment Manager excludes investments in companies that:
- extract or explore for fossil fuels;
- derive 10% or more of their total revenue from fossil fuel-based power generation, or fossil fuel distribution or refinement; or
- the mining of uranium for the purpose of nuclear power generation.
These selection criteria may not be disapplied or overridden by the Investment Manager unless it is a fossil fuel company with a Paris Agreement-aligned climate transition plan and it produces robust climate-related financial disclosures annually, which in both cases the Investment Manager considers credible.
Also excluded, to avoid contributing to social harms, are companies that:
- produce tobacco;
- manufacture controversial weapons;
- derive 10% or more of their total revenue from the production of alcoholic beverages;
- derive 10% or more of their total revenue from the manufacture, ownership or operation of gambling facilities, gaming services or other forms of wagering;
- derive 10% or more of their total revenue from the manufacture of non-controversial weapons or armaments; or
- derive 10% or more of their total revenue from the manufacture or distribution of pornography.
Additionally, the Investment Manager recognises that ESG factors can create risks and opportunities for companies and as such incorporates ESG risks into their analytical framework and portfolio construction.
In order to measure and monitor the environmental and social characteristics of the Fund, the Investment Manager will review a variety of internally- and externally-generated ESG data produced by its third-party data providers and published by its investee companies. This allows the Investment Manager to review performance against those environmental and social characteristics across all four dimensions of the investment process.
