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Janus Henderson Enterprise D JANEX Sustainability

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Sustainability Analysis

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Sustainable Summary

Janus Henderson Enterprise Fund has a number of positive attributes that a sustainability-focused investor may find appealing.

This strategy has an above-average Morningstar Sustainability Rating of 4 globes, indicating that the ESG risk of holdings in its portfolio is relatively low compared with those of its peers in the US Equity Mid Cap category. ESG risk measures the degree to which material environmental, social, and governance issues, such as climate change and inequalities, could affect valuations. ESG risk differs from impact, which is about driving positive environmental and social outcomes for society’s benefit.

One key area of strength for Janus Henderson Enterprise Fund is its low Morningstar Portfolio Carbon Risk Score of 6.77 and low fossil fuel exposure of 3.06% over the past 12 months, which earns it the Morningstar Low Carbon Designation. The fund is therefore well positioned to transition to a low-carbon economy. No companies held by Janus Henderson Enterprise Fund are recognized as being involved in controversies at a high or severe level. From bribery and corruption to workplace discrimination and environmental incidents, controversies can have significant financial repercussions, ranging from legal penalties to consumer boycotts. In addition, controversies can damage the reputation of both companies themselves and their shareholders.

One potential issue for a sustainability-focused investor is that Janus Henderson Enterprise Fund doesn’t have an ESG-focused mandate. A fund with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes.

ESG Commitment Level Asset Manager

 | Low

The firm earns a Morningstar ESG Commitment Level of Low.

Despite being an early signatory of the UN Principles for Responsible Investment in 2006, the firm has just begun ramping up its ESG efforts in recent years. Its London-based governance and responsible investing team has now grown to seven members. All but two joined in the past couple years, with global head of ESG Paul LaCoursiere joining the firm in January 2021. The group subscribes to multiple ESG data sources and supplements those with in-house research, all of which is made available to investment managers through the firm’s eQuantum platform. Investment teams can also draw on LaCoursiere’s team for corporate engagements and ad-hoc projects, the bulk of which focus more on traditional governance concerns rather than environmental and social issues.

As a bottom-up, fundamental management firm, Janus Henderson doesn’t mandate a firmwide view on ESG and its systematic incorporation into investment strategies. Instead, it takes a more decentralized approach. ESG integration is left to the discretion of individual investment teams to the extent they find it supportive of good, long-term outcomes for clients. Many portfolio managers do indeed factor ESG considerations into their investment decisions, but to varying degrees and not uniformly across the firm. Doing so is not required, and ESG integration is not tied to compensation for non-ESG-focused strategies. Furthermore, there are no firmwide exclusions.

Overall, Janus Henderson’s philosophy toward ESG is consistent with how the firm operates as investors. ESG issues are considered, but to varying degrees across investment team.