Investments & ISAs Overview

The fund seeks to invest in companies that positively contribute to the following: 

Impacts on people 

• Community involvement - companies active in the community with programmes that may include staff secondment, support of Business in the Community, the Per Cent Club or charitable giving and fundraising
• Corporate governance - companies which demonstrate accountability to their investors
• Education and training - companies supplying education or training services to enhance the quality of life and opportunity in the workplace
• Employee relations - companies with good industrial relations records and policies that include, for example, measures to encourage employee participation, support for women and minorities, and Employee Share Ownership Plans
• Healthcare services - companies supplying medical equipment, nursing services, care for the elderly or holistic therapies
• Health and safety equipment - companies supplying equipment that minimises the risk of industrial accidents and improves workplace conditions and supplying specialist equipment that have a health, safety or environmental application
• Policy statements, audits and openness - companies with clear policies and systems of accountability. For example, those that publish a statement of business ethics or code of conduct, have environmental management systems or conduct social audits and make them publicly available
• Progressive relationships and strategy: companies that clearly outline and explain the environmental implications of their corporate strategy.
• Companies which actively promote the interests of staff, such as maternity/paternity leave, counselling services; customers, for example those with eco-labelling of products; suppliers, such as those implementing audits for environmental performance and fair trade; and the public, such as those which contribute to community activities

Impact on the environment 

• Energy conservation - companies engaged in the supply of energy conservation services such as domestic or industrial insulation, or electronic energy efficiency devices
• Mass transit systems - companies engaged in the provision of bus and rail services, or manufacture of bicycles, buses and trains
• Multimedia and telecommunications - companies which are directly involved in transforming the use of information, communication or ways of working, including developments in the internet, CD-ROMS, tele-working and mobile telephony
• Pollution monitoring/pollution control equipment - companies engaged in the manufacture, supply or operation of pollution control equipment or monitoring devices
• Process control equipment - companies engaged in the manufacture or supply of efficiency improvement devices that provide water, energy or materials savings
• Recycling services - companies engaged in the collection and recycling of waste or which use a high proportion of recycled waste in their products
• Renewable energy - companies involved in the generation of electricity from renewable resources such as wind, solar and hydro power
• Water management - companies involved in the protection and provision of water supplies, or provide water purification services or equipment

Impact on animals 

• Textiles - companies developing alternative textiles to leather
• Vegetarian foods - companies active in processing or retailing vegetarian foods

The fund will not invest in companies involved in the following: 

Impacts on people 

• Alcohol - companies involved in the production of alcoholic drinks or which generate more than 10% of their turnover from its sale
• Armaments - companies involved in the sale or production of strategic goods or services for military weapons or operations
• Gambling - companies with activity related to gambling, including the National Lottery and ownership or operation of betting shops, horse and greyhound racing tracks, licensed bingo halls, casinos or gaming clubs
• Irresponsible marketing - companies that have consistently had public complaints upheld against them by the Advertising Standards Authority (ASA) or have irresponsibly marketed products, such as breast milk substitutes, to developing countries
• Oppressive regimes - companies with subsidiaries or associated interests which support the activities of oppressive regimes, or companies which use forced labour are avoided
• Pornography - companies that publish, print or distribute newspapers or magazines, or distribute films or videos, classed as pornographic
• Tobacco - companies that engage in activities related to the production of tobacco products or generate more than 10% of turnover from tobacco sales

Impacts on the environment

• Contentious industries - investments will not be made in companies in contentious industries such as mining, oil, chemicals, car manufacture, or in pharmaceutical companies using animal testing, unless the company can demonstrate an outstandingly positive response towards environmental and social concerns
• Chemicals - the fund avoids companies which manufacture, store, wholesale or retail chemicals or products containing chemicals which are subject to bans or severe restrictions in major markets around the world or referenced by internationally agreed lists (e.g. the Rotterdam Convention) and seek at all times to operate to the highest standards available
• Nuclear power - companies which are involved in the uranium fuel cycle, treat radioactive waste, or supply nuclear related equipment or services for constructing or running nuclear plant or facilities are avoided
• Ozone layer - companies that make or sell ozone depleting chemicals or users of ozone depleting chemicals that have yet to set dates for their phase-out are avoided
• Road building - companies generating more than 10% of turnover from road building are avoided
• Tropical hardwood- companies active in the extraction, clearing, processing or import of tropical hardwood products are avoided 
• Water pollution - companies consistently exceeding discharge consents are avoided

Impacts on animals

• Fur - companies involved in the sale or manufacture of animal fur products are avoided 
• Genetic engineering - companies involved in the deliberate release of genetically modified organisms (e.g. animals and plants) are avoided. Medical and industrial applications in a contained setting will be assessed on a case-by-case basis.

The SRI funds have a policy of actively voting its shares in all geographies where possible, to promote high standards of corporate governance and corporate responsibility. 

Voting information for the SRI funds is reported in the Eurosif Transparency Guidelines.  

An example of recent voting was a vote in line with the managers of FirstGroup and against a shareholder resolution to adopt workplace human rights policy, which the SRI team had supported in the previous year, the reason being it felt the company had taken appropriate action on the issue.

The fund undertakes three forms of company engagement: 

• The first is baseload engagement, where it seeks regular updates from companies on their corporate responsibility, and which are prioritised according to the size of the company in the SRI funds
• Second is thematic engagement, where it selects an issue of importance and undertakes research and engagement with a number of companies to compare and contrast approaches; and
• Third is reactive engagement, engaging with companies in the wake of events which raise concerns, and which are prioritised by the severity of the issue at stake 

 The SRI research team, assisted by the Corporate Governance Manager undertakes engagement on behalf of the funds. Typical engagement activities are dialogue through meetings, conference calls, telephone calls or written communications. 

An example of recent engagement is with Reed Elsevier (UK) regarding involvement in organising defence trade exhibitions.  

In addition, the Fund also engages in policy dialogue with the aim of helping to shape the market so that sustainable and responsible behaviour is rewarded.  Such engagement may be proactive or reactive in nature. 

In terms of policy, Henderson engaged with a number of companies on the Carbon Disclosure Project to encourage them to respond.

Research is conducted in-house, as well as by a number of external agencies, stakeholders and a network of independent experts. 

Research is reviewed by an independent ethical committee and the effectiveness of the research process is reviewed formally on an annual basis.

Companies are divested if business activity falls under one of the excluded activities or if its corporate responsibility (CR) practice becomes unacceptable. 

If the company that is having its approval status revoked is currently held in a fund, the fund manager has a three month period in which to divest of the holding. 

This is to ensure the fund does not incur any unnecessary financial costs.

www.henderson.com/sri

£66.3m (05/09)