James Hambro Harrier Capital Growth Fund – SFDR Article 8 Sustainability Disclosures

The Sub-Fund does not have a sustainable investment objective. The Sub-Fund does promote environmental and social characteristics but will not make any sustainable investments.

The Sub-Fund pursues investments which allow the financial product to promote the following environmental and/or social characteristics that draw on the United Nation’s 17 Sustainable Development Goals:

  1. Decarbonisation – to reduce carbon and greenhouse gas emissions.
  2. Transition to a circular economy – to transition to a more sustainable use of the world’s resources and adjust for the impact that a company’s activities have from production to consumption to disposal.
  3. Protection and restoration of biodiversity and ecosystems.
  4. Equitable, healthy and safe society.
  5. Strong governance and accountability

Attainment of the environmental and social characteristics being promoted by the Sub-Fund is measured on a qualitative basis by the Investment Manager by evaluating the relevant companies, issuers and CIS against the Investment Manager’s sustainability framework and the overall success of the investment thesis within the Investment Manager’s sustainability investment strategy.

The Investment Manager uses an internal analysis whereby all direct investments in companies and corporate issuers are evaluated across the above characteristics as part of the Investment Manager’s sustainability framework. These characteristics form the basis of five pillars which capture the major themes that the Investment Manager believes will determine which companies or issuers across various industries will benefit from the transition towards a more sustainable path of economic growth.

The Investment Manager will also exclude investment into businesses that produce products which they deem fundamentally at odds with their investment approach of sustainable growth and where engagement is unlikely to lead to a positive change. Direct investment into businesses involved in the production of tobacco or controversial weapons are excluded on this basis.

The Investment Manager also assesses the governance practices of companies, corporate issuers and CIS through a combination of internal analysis and the use of governance ratings provided by third-party providers. Governance practices form a key pillar within the Investment Manager’s framework described above, with potential and existing investments assessed to ensure they follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance. Monitoring compliance and engagement on governance issues for existing holdings is primarily managed through implementation of the Investment Manager’s voting policy.

The Investment Manager monitors compliance with the characteristics outlined above on a regular basis through a combination of qualitative internal analysis and quantitative ESG metrics provided by third-party data providers. Alongside these processes, the Investment Manager uses an independent ESG research and ratings provider, and these ESG ratings are incorporated into the wider investment framework. The independent research and ratings provider categorises companies and corporate issuers into those that are either “leaders”, “average” or “laggards” resulting a corresponding rating between (AAA) in the “leaders” category and worst (CCC) in the “laggards” category.

No reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by the Sub-Fund.

This financial product promotes environmental or social characteristics, but does not have as its objective a sustainable investment.

The Sub-Fund pursues investments which allow the financial product to promote the following environmental and/or social characteristics that draw on the United Nation’s 17 Sustainable Development Goals:

  1. Decarbonisation – to reduce carbon and greenhouse gas emissions.
  2. Transition to a circular economy – to transition to a more sustainable use of the world’s resources and adjust for the impact that a company’s activities have from production to consumption to disposal.
  3. Protection and restoration of biodiversity and ecosystems.
  4. Equitable, healthy and safe society.
  5. Strong governance and accountability

The Investment Manager uses an internal analysis whereby all direct investments in companies and corporate issuers are evaluated across the above characteristics as part of the Investment Manager’s sustainability framework. These characteristics form the basis of five pillars which capture the major themes that the Investment Manager believes will determine which companies or issuers across various industries will benefit from the transition towards a more sustainable path of economic growth.

In addition, the Investment Manager obtains environmental, social and governance (“ESG”) data in respect of the five pillars from external providers. Then, using a combination of internal analysis and the external ESG data in respect of the five pillars, the Investment Manager uses this as part of the sustainability framework to make a qualitative assessment of an investee company’s or issuer’s sustainability-related risks or opportunities, and their materiality to the investment case for each company or issuer.  For example purposes only, through the Investment Manager’s internal analysis and provision of external ESG data, the Investment Manager may seek to gain information on a proposed investee company or issuer that is, for example, operating in the technology sector to understand how they manage data in the context of the characteristic of strong governance and accountability. Based on this information, the Investment Manager can then assess if the proposed investee company or issuer is an appropriate investment opportunity and promotes the above-mentioned characteristics.

The Investment Manager will also exclude investment into businesses that produce products which they deem fundamentally at odds with their investment approach of sustainable growth and where engagement is unlikely to lead to a positive change. Direct investment into businesses involved in the production of tobacco or controversial weapons are excluded on this basis.

The five pillars of the sustainability framework allow companies proposed to be invested in by the Sub-Fund to be classified across one of the following three categories using the Investment Manager’s qualitative assessment:

  • Mitigating: investee companies or corporate issuers in this category are those whose manufacturing and distribution of their products may have a negative impact on the environment, or on entities involved in the supply of the investee companies’ or issuers’ products, but where the investee companies or issuers have provided a roadmap towards sustainability and a credible plan for improvement.
  • Transitioning: investee companies or corporate issuers in this category are companies who are providing goods and services that are currently critical to the functioning of the global economy and which will be necessary as the global economy transitions to a more sustainable economic model. All such proposed investee companies or issuers must have credible strategies in place to ensure that they can contribute to a more sustainable future economy.
  • Enabling: investee companies or corporate issuers in this category are companies who are enabling the transition towards a more sustainable and equitable world directly through the sale of their products of services.

This classification allows the Investment Manager to monitor overall exposure to different types and degrees of ESG-related risks and opportunities across a diverse number of sectors and geographies, informing the balance of portfolio construction and the focus of the Investment Manager’s future engagement with the investee companies or corporate issuers.

Where the Sub-Fund invests into sovereign debt markets, as part of the Investment Manager’s identification and selection of debt securities the Investment Manager considers the influence of national political, social and economic factors on the sovereign’s approach to sustainability. This consideration is a binding aspect of the Investment Manager’s strategy. Particularly, the Investment Manager analyses how the ESG risks could impact a sovereign issuer’s credit rating or solvency and therefore return on capital. The Investment Manager also considers, as part of its binding strategy, governance arrangements in the assessment of the risk that a sovereign issuer may limit external access to investors assets through the imposition of capital controls or that national governments or the international community may impact a sovereign issuer through the imposition of sanctions.

Where the Sub-Fund invests in the securities of sovereign issuers the exposure will predominantly be to investment grade issuers in developed markets where the political system and national income per capita are consistent with a high degree of alignment with the characteristics that the Sub-Fund promotes.

Where the Sub-Fund invests in units of a CIS a different approach is undertaken by the Investment Manager to identity CIS to invest in that promote the above-mentioned characteristics given the different investment structure and reduced influence over the underlying holdings included in the CIS. The approach taken by the Investment Manager to identify CIS to invest in, in respect of the Sub-Fund, involves the following binding strategies:

  • The Investment Manager uses a qualitative approach to analysing the CIS that the Sub-Fund proposes to invest in. All CIS that the Sub-Fund may invest in are assessed to understand if each CIS shares a similar approach to the Sub-Fund to investing responsibly. In addition, the CIS are analysed to understand if they take into account ESG risks as part of the investment process as the Investment Manager believes that this is an essential part of assessing the risk and opportunity in investing in CIS.
  • The Investment Manager also analyses the approach of the manager of the CIS in respect of ESG matters alongside an analysis of how ESG is incorporated into each CIS’ strategy.
  • The Investment Manager then uses a mix of internal and external ESG research in order to inform their investment decisions on whether to invest in the CIS. In respect of external ESG research the Investment Manager relies on third party data providers. External research data providers provide an ESG rating for the CIS which enables comparison against other CIS and monitoring of changing sustainability ratings, which informs the Investment Manager’s decision making process so that the Investment Manager can understand if the CIS promote the above-mentioned characteristics;
  • The Investment Manager also engages with the managers of the CIS on a regular basis as part of their investment due diligence (including initial due diligence and post-investment) on ESG matters to understand if they promote the above-mentioned characteristics.
  • On the basis of the ESG ratings, internal analysis and engagement with the CIS, the Investment Manager will assess on a qualitative basis this information in order to determine if the investment in the proposed CIS is an appropriate investment opportunity and promotes the above-mentioned characteristics.

The Investment Manager also assesses the governance practices of companies, corporate issuers and CIS through a combination of internal analysis and the use of governance ratings provided by third-party providers. Governance practices form a key pillar within the Investment Manager’s framework described above, with potential and existing investments assessed to ensure they follow good governance practices, in particular with respect to sound management structures, employee relations, remuneration of staff and tax compliance. Monitoring compliance and engagement on governance issues for existing holdings is primarily managed through implementation of the Investment Manager’s voting policy.

The minimum proportion of the investments of the Sub-Fund used to meet the environmental or social characteristics promoted by the Sub-Fund in accordance with the binding elements of the investment strategy is 70%. These investments include equities and equity related securities, fixed income securities and CIS. There are no minimum environmental or social safeguards. The remaining 30% consists of cash deposits and money market funds. These investments are used to generate income, diversify the risks associated with the equity and fixed income investments which comprise the minimum proportion of investments “aligned with E/S characteristics” with the intention of enhancing the risk and return characteristics of the Sub-Fund over the investment horizon.

The Investment Manager monitors compliance with the characteristics outlined above on a regular basis through a combination of qualitative internal analysis (sustainability reviews on the investments held within the Sub-Fund based on the five-point framework described above in respect of the equity securities, corporate debt securities and sustainability reviews on the CIS as compared to initial due diligence carried out on the CIS (and where relevant, its manager)) and quantitative ESG metrics provided by third-party data providers.

Alongside the above-mentioned processes, the Investment Manager uses an independent ESG research and ratings provider, and these ESG ratings are incorporated into the wider investment framework. The independent research and ratings provider categorises companies and corporate issuers into those that are either “leaders”, “average” or “laggards” resulting a corresponding rating between (AAA) in the “leaders” category and worst (CCC) in the “laggards” category.

The Investment Manager will only invest in companies or issuers classified as ‘leaders’ and those classified as “average” according to the data provider’s classification. Where a company or issuer is downgraded by the data provider to be recategorised as a “laggard”, analysis will be undertaken by the Investment Manager to deconstruct the reasoning for the downgrade, and ultimately, the asset will be sold within a reasonable timeframe taking into account the bests interests of the Sub-Fund. Regular reviews and analyses are undertaken by the Investment Manager on investments and their ratings. Reviews are conducted by the Investment Manager at least quarterly, and real-time alerts are also received with any changes.

Refer to the Investment strategy section.

Refer to the Investment strategy section.

Please refer to James Hambro & Partners Engagement Policy.

No reference benchmark has been designated for the purpose of attaining the environmental or social characteristics promoted by the Sub-Fund.

The value of your investments and the income received from them can fall as well as rise. You may not get back the amount you invested.

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