2011 UPDATE TO FOLLOW

Business standards
Corporate governance

We support the high standards of corporate governance contained in:

• the Combined Code on Corporate Governance issued by the Financial Reporting Council in June 2008 (Combined Code); and
• the Corporate Governance Principles and Recommendations issued by the ASX Corporate Governance Council in August 2007 (ASX Principles).

Code of Conduct

We are committed to maintaining high standards of business conduct in all our operations and activities. The Code of Conduct, which forms part of employees’ contracts of employment and which is on our website, sets a framework within which the Directors and employees are expected to operate in the best interests of shareholders, customers, employees and suppliers.

Investment management

Our business goal is to deliver sustainable, long-term investment performance to our clients. Integration of environmental, social and governance (ESG) issues into the investment process can potentially aid in this, as well as making us responsible investors. Responsible investment describes the work we do pertaining to corporate governance and responsibility in the companies in which we invest on behalf of clients. Our Responsible Investment Policy, available on our website, sets out how we do this for our equity funds. Our Responsible Investment Committee ensures that we consider these issues in an integrated manner. We also provide a range of Sustainable and Responsible Investment (SRI) funds where ESG issues are proactively considered.

We have an active programme of work on corporate governance and voting. This includes engaging with and encouraging UK companies to comply with the Combined Code or explain why they have not done so. We vote at UK company meetings where we are a shareholder and at selected meetings in other countries. Our views on voting issues and details of where we voted against board resolutions are published on our website. Outside the UK, we vote according to the requirements of our clients on instructions from our fund managers.

We engage directly with companies to explore the investment implications of sustainability and corporate responsibility issues, with such initiatives undertaken most actively by the SRI team. As well as monitoring companies’ overall performance on such issues, we undertake in-depth research and engagement into key themes, such as climate change.

Key themes explored by the SRI team

 

2007	Climate change, responsible governance, sustainable supermarkets, pharma and access to medicines
2008	Climate change, chemical safety, supply chain labour standards, community social exclusion, tar sands, cluster munitions
2009	Climate change, business ethics, workplace health and safety, water management
2010	Climate change, business ethics, solar industry sustainability, access to medicines, employee management, ESG disclosure

During 2010, we made progress in developing a framework for collecting, evaluating and reporting on our ESG company engagement activities.  For 2011, we will continue to explore ways to integrate ESG factors across our asset classes, as well as how we report more effectively against the UK Stewardship Code. 

We support co-operative action among investors to address market wide issues. For example, we are a member of the United Nations Environment Programme's Finance Initiative, and the Institutional Investor Group on Climate Change. We also support the Carbon Disclosure Project. We are a founding signatory to the United Nations Principles for Responsible Investment, a voluntary and aspirational framework incorporating environmental, social and corporate governance issues into mainstream investment decision-making and ownership practices.

Responsible investment practices are also integrated into our Property business. Our Pan-European Property team undertook a comprehensive sustainability assessment of all assets in eight of its nine UK property funds during 2008, to develop individual fund strategies which prioritise necessary actions to minimise sustainability risks and maximise opportunities on fund assets. A steering committee monitors progress against fund level targets and updates are provided to investors in the relevant property funds. We published a Responsible Property Investment report in 2010 which sets out activities and progress made against our targets. In addition, Henderson has published a policy on Responsible Property Development and has implemented detailed targets relating to its development activities. Our property team is currently rolling out a programme to measure carbon emissions, water consumption and waste set to landfill and has set targets to improve the environmental and social impacts of assets under management. For 2011, our property team will set new 2011 targets for its activities, and continue to report publicly on its performance.

Customers

We are committed to the highest standards of customer care.

We seek to achieve industry best practice and to ensure that customers experience integrity, quality and care in all dealings with the Group.

We believe the Treating Customers Fairly (TCF) initiative promoted by the FSA is embedded within the culture and procedures of the Group. TCF, among other priorities, is intended to promote fair treatment of customers by regulated firms throughout the product life cycle, from design to post-sales support. We always aim to:

• treat our customers fairly;
• ensure that any information provided in respect of a product is clear, fair and not misleading; and
• align our interests with those of our customers.

The Group is required by its Financial Crime Policy to observe high standards of customer identification, to identify and report suspicious transactions and to ensure that relevant employees receive adequate training.

2011 UPDATE TO FOLLOW

The Group recognises the value and contribution employees make to the success and future growth prospects of the business. We have human resource policies and procedures to support the recruitment, retention, reward and development of employees. We aim to ensure that these policies meet best practice and fully comply with relevant employment legislation and the provisions and ethos of the Universal Declaration of Human Rights.

Equality and diversity

We are an equal opportunities employer and have appropriate human resource policies and procedures in place with the intention that employees have a working environment free from discrimination and harassment.

Our human resource policies and staff benefits attract and retain a diverse and flexible workforce. Additionally, we give full and fair consideration to applications from, and the continued employment of, people with disabilities and learning difficulties.

In line with the UK Public Interest Disclosure Act 1988, we operate procedures to enable employees to report wrongdoing or malpractice at work, commonly referred to as ‘whistleblowing’. All employees are informed of this process during their induction to the Company.

Employee consultation and involvement

The Communications Forum is a UK elected body representing staff and is a platform where issues affecting staff can be discussed and, if needed, raised with the Senior Management Team. It also provides a platform for management to consult with staff and seek views on particular issues. The Communications Forum meets monthly and the Chief Executive attends quarterly. Regular employee briefings are carried out by senior management to provide an insight into the business. The Chief Executive held two staff briefings in 2010 which were made available on the Group intranet.

Staff survey

Employee’s views are sought through a staff survey. In the most recent survey, conducted in 2010, all staff were invited to participate by completing a confidential online questionnaire. 81% of staff participated in the survey.

The survey showed that in many areas the Group exceeded its industry benchmarks, in particular customer focus, overall staff engagement and commitment to Henderson and job satisfaction scored highly. Areas identified for improvement in 2011 include career development and training.

Recruitment

Our recruitment strategy aims to attract and retain talented individuals. Across the group, the number of vacancies in 2010 increased by 23% from 2009. We encourage employees to consider opportunities within the Group and advertise job vacancies on the Group intranet. This is evidenced by the table below which demonstrates an increase in roles being filled by internal transfers. We also run a global employee referral programme allowing employees to refer individuals to the Group as prospective employees.

 

Year	Roles filled by internal transfers	Roles filled with employee referrals
2009	20	4
2010	24	3

We offer resourcing and interviewing courses which cover developments in recruitment practice, assessment methods and interviewing skills. We offer one-to-one training for line managers to assist with this.

Graduate and Trainee Recruitment Schemes

We run a graduate recruitment programme which runs for two years and helps us invest in our future talent through a structured development plan. Graduates are given the opportunity to work alongside fund managers, analysts, sales directors and other professionals in a dynamic and engaging environment. All graduates on the programme are sponsored to take the full Chartered Financial Analyst qualification.

In 2010 we introduced a trainee programme to complement the existing graduate programme. The one year scheme is designed to be a stepping stone into the industry, offering up to 40 individuals per year the opportunity to develop new skills through a mixture of ‘on the job’ and formal training.

Learning and development

We believe that our people are our most value adding asset and that to achieve sustainable business results our employees need to be working at their highest potential. Real work experience is the building block for all our organisational learning; and essential for our employees achieving professional excellence.

Our Approach is to embed leading edge methodologies in our learning approach by focusing on delivering bottom line value where learning is measured and we can see individual performance develop, leading to improved results. We constantly review development needs to ensure we have the right capability at the right time.

Our Development Pathway

In 2010 we launched “The Pathway” as a development platform for our employees. It is a roadmap for individuals to identify, access and navigate the development solutions they need to build performance in both their current and future roles. The paths are structured around the core experiences an employee is likely to have during their career at Henderson Group.

Using The Pathway, we empower our employees to define their own learning journey and drive their own development experiences. As an organisation we aim to provide the most effective means of support depending on individual needs.

We offer a variety of development solutions delivered in a number of ways to increase knowledge and awareness, and to suit individual learning styles, e.g. courses, workshops, seminars, conferences, ‘on the job’ structured programmes and executive coaching. At the heart of every format is a distinct theme of learning through doing. We want our employees to build high performance, and this means deep development through experiences and targeted reflection.

We connect our learning to current organisational issues as we believe the best case studies are within our walls and learning from the diverse experiences of our colleagues builds new realisations and transformative change.

We have a selection of specialist, “best in class” providers that assist with the design, development and delivery of training programmes.

We offer many different kinds of learning solutions:

Qualifications

We provide sponsorship for many professional qualifications which include financial and study support. In addition, we monitor study progression and provide extra support by means of further tutorials, encouragement of mock exams, designated peers and projects.

The table below lists the training course attendance in the UK and our sponsorship rates for professional qualifications.

 

Year	Total hours training	Sponsorship of professional qualifications (no. of employees)
2008	9,626	154
2009	7,713	135
2010	10,836	71

The number of people taking qualifications dropped in 2010, primarily due to a 50% drop in the number of employees taking the Investment Management Certificate (IMC) and the introduction of a more difficult, Retail Distribution Review compliant IMC.

Leadership Programmes

For our current and future leaders we have designed two new leadership programmes, Stepping into Leadership and High Impact Leadership, which are focused on developing high performance leadership capabilities within our top management population. These modular programmes are facilitated at the Royal Military Academy Sandhurst – an institution that symbolises leadership excellence. Participants experience leading methodologies used within the military and reflect on the implications for leadership. Participants are given a team challenge to complete to enable them to see leadership as behaviour. Partnering with the charity Fairbridge, participants have also raised money for disadvantaged youths enabling them to see the powerful impact of team action.

Open-Series

The open-series is an open learning programme, providing a variety of different learning formats to suit individual needs. One of the most successful has been the discussion by our senior leaders on topics they are passionate about and add value to the business. This enables employees to create connections with senior managers and gain value from their skills and talents. External speakers have led sessions to trigger new approaches and ideas, including leadership lessons from Yogi Breisner, coach of the UK’s medal winning equestrian team, and new ways of connecting with teams with Adam Travis from Nokia. These have been widely attended and positively rated by staff looking for the edge in how they approach their work. We have also launched bite sized sessions enabling staff to receive training as part of their working day. Sessions included Effective Risk Management, Introduction to Fund Management, Managing Change and Strategic Thinking.

Curriculums

We are also in the process of building specialised professional development curriculums for our different professional areas. These would focus on specific needs within the different business areas. We are piloting the first curriculum design with our distribution and sales area this year.

Our learning platform reflects the fact we are a global business. We ensure we have a central approach to learning design, but customise delivery based on local needs. This is done through our regional delivery centres in the UK/Europe, Asia and the USA.

Employee reward and retention

The Group recognises and rewards performance based on an employee’s contribution to the success of the business. The Group has a total reward approach, which has a mix of both financial and non-financial elements.

We pay competitively and give greater reward for stretch and superior performance. We deliver this both through short-term bonuses (usually annual cash bonuses) and, for senior managers, through longer-term incentives (generally three to four year equity based plans). Bonus payments above a certain monetary level have a portion deferred to provide a retention element to the incentive.

We are committed to building staff share ownership and we have several share schemes which employees are encouraged to join. 13.8% of the company is owned by our employees if all our existing shares vest, an increase from 3% in 2005. Our share schemes have won awards and been recognised at the ifs ProShare and Employee Benefit Awards for the last four years. We also launched an international Buy As You Earn plan targeting non-UK employees. 90% of employees contribute to one of our share schemes.

Our award winning financial education package has provided a wide range of planning tools to employees. This includes an interactive online financial education programme, in-house presentations, tax calculators and access to independent advisors.

2011 UPDATE TO FOLLOW

We follow responsible environmental management practices. These include systems to limit the use of non-renewable resources and minimise the adverse impact of our operations on the environment and, where we can, to have a positive impact through engagement, training, awareness and support of environmental innovation with our supply chain.

Climate change

Our policy is to minimise any adverse impact on climate change. To achieve this, we operate a three-tiered approach where we:

• reduce emissions by active management of energy consumption, business travel and waste minimisation programmes;
• switch to renewable energy sources where possible; and
• offset unavoidable emissions by operating a formal carbon offset programme, thereby maintaining a Carbon Neutral Status.

In late 2009 Henderson completed pilot testing for the implementation of a carbon measurement and accounting solution known as Acco2unt, developed by Greenstone Carbon Management Ltd. Acco2unt has provided Henderson with the ability to undertake our own real time calculation and management of our carbon emissions at a touch of a button as well as allowing our global offices to take responsibility for the gathering of accurate data to inform those calculations and upload that directly to the Acco2unt solution.

Our emissions (net of electricity offset by, our Landlord, British Land) were 2772 tonnes CO2e in 2010. On a global basis, net emissions per employee were 2.5 tonnes CO2e. The 15% growth in gross emissions between 2009 and 2010 reflects the significant focus on growing Henderson’s international activities, while the corresponding growth in the Henderson carbon credit portfolio reflects this commitment to full accountability.

2010 saw extended business development activities in both North America and Asia requiring significant international air travel from the coordinating geographies. Corresponding business travel was the main source of the emissions growth, rising 67% in 2010 relative to 2009, with international air travel being the primary growth.

The increase in air travel can be attributed to two factors. Firstly it is consistent with the growth in the underlying business and the corresponding need to travel to develop the business on a more global basis. Secondly the increase can be attributed to more accurate reporting of the underlying flight data. In 2010 significant progress was made to increase the accuracy of flight data, usage data is now sourced directly from the travel management provider for the majority of flights rather than collated through internal systems. This increased accuracy is likely to have lead to an increase in measured emissions as it reduces the risk of under reporting flight data which may have occurred in previous years.

Although the travel footprint increased, Henderson achieved an 11% reduction in electricity consumption across the group with emissions dropping from 2536 tCo23 in 2009 to 2248 tCO2e in 2010. This reduction was delivered by the ongoing energy efficiency programme at the London office.

The table below shows the Group’s net energy, waste and travel emissions in tonnes of CO2e:

Emission Source	2005*	2006	2007**	2008	2009	2010
Premises – Electricity	2,475	2,626	2,794	2,643	2,536	2,248
Premises – Other	226	254	211	183	158	127
Business Travel	891	1,809	2,203	1,764	1,365	2,277
Total Gross Emissions	3,592	4,692	5,208	4,590	4,059	4,652
Services offset on procurement	0.0	0.0	(2,400)	(2,323)	(2,206)	(1,880)
Carbon credits from TCNC	0.0	0.0	(2,808)	(2,267)	(1,853)	(2,772)
Total Net Emissions	3,592	4,692	0.0	0.0	0.0	0.0

*2005 emissions cover UK only, 2006-2010 also cover international offices
**From 2007 UK electricity supply has been a renewable and then carbon offset tariff

As part of the Group’s consultation on its new London office, an agreement was reached with the landlord and other tenants to put in place an energy management and offset regime. This has resulted in all emissions for the running of the building being measured centrally and offset by the landlord as part of the procurement process. This innovative initiative was shortlisted in the Tackling Climate Change Category in the Sustainable City Awards.

2010 Carbon Emissions Report

The end of year Carbon Emissions Report details the global carbon emissions used during 2010. This report has been written by The CarbonNeutral Company who are Henderson’s partner in carbon reductions as well as their carbon offset provider for unavoidable emissions.

For a copy of the complete report please click on the link below:

Environmental initiatives and awareness

Training and awareness programmes are in place for support staff and contractors involved in waste management. 21 of the facilities support staff undertook a one day training course all passing with a Chartered Institution of Wastes Management Certificate. We are also actively involved in a number of local and City of London Environmental Best Practice Groups. Our Environmental Homepage on the Group intranet provides information to staff on our policies, carbon emission status, environmental initiatives and performance. It is also used to encourage staff to engage in and support the recycling schemes we have in place.

Waste minimisation and management

In 2010, we continued our UK programme to segregate and convert all food waste from our London office into compost. Our original partnership with a local small business has resulted in the composting company being expanded through our recommendation. During 2010 the Group converted 17.20 tonnes of waste food into 6.74 tonnes of compost.

Our research into plastic recycling resulted in a programme which ensures that our waste plastic and cans are recycled within the UK. We recycled a total of 8.66 tonnes of plastic, packaging and cans in 2010.

Further research for a local company that could recycle photocopier toners and parts was conducted in late 2009. This resulted in a solution being found where waste photocopier toners and parts are collected, disassembled and all components recycled, including any toner residue which is used as concrete aggregate for the building industry. Historically this waste steam was incinerated to power the national grid, but in 2010 this waste stream of 474 kg was recycled.

The Group continues to minimise waste where possible and has implemented a number of measures including:

• recycling of all waste paper by delivering it to a local mill and procuring 100% recycled paper supplies from the same mill;
• elimination of any waste sent to landfill by segregating it at source, recycling as much as possible and incinerating the remainder to power the national grid;
• procurement of quality recycled stationery. 87% of current office stationery spend is on recycled or environmentally-friendly products; and
• reuse programmes for surplus office furniture, equipment and technology.

Cycle to work scheme for the London office

In 2009, the Group enrolled the UK Government’s cycle to work scheme. The cycle to work scheme is an innovative scheme that allows employees to purchase bicycles net of both income tax and VAT for the purposes of commuting to work. While this will not reduce the carbon footprint as commuting emissions are not currently reported, it is an important initiative as it brings numerous benefits to the workforce, in terms of well being and environmental awareness. To date we have 46 employees who have joined the scheme.

Recognition

We are pleased that our environmental efforts, as a major occupier of the City of London, were recognised again in 2010 by the Clean City Award Scheme. We received a gold award at the ceremony that took place at Mansion House on Friday 21 January 2011.

Shareholder communications

We adopted e-communications as a more effective and efficient way to keep in touch with shareholders. Over 75% of Henderson Group plc shareholders have agreed to access shareholder information on the Group website rather than being sent hard copies. In addition, through the eTree initiative in Australia, of which the Group is a founding member, we aim to reduce printed investor communications and encourage shareholders to receive communications electronically. Every time a shareholder registers with eTree, the Group makes a donation to Landcare Australia. The Annual Report and Accounts is printed on paper certified by the Programme for the Endorsement of Forest Certification meaning that it originates from forests that are managed sustainably.

Health and safety

We are committed to providing a safe working environment for full-time employees, contractors and temporary workers. We have a health and safety policy statement, working group and Executive Committee with representatives from across the business. The Director of Facilities, assisted by the Company Safety Officer, is ultimately responsible for health and safety. All employees receive health and safety training on induction and training and advice is also provided via all staff emails and e-learning programmes. An independent annual audit is conducted in addition to the internal health and safety control process. All reported incidents are investigated and remedial action is taken as appropriate.

Employment Status

 

Year	Reported incidents	Full-time employees	Non full-time employees
2008	20	17 (minor)	3 (minor)
2009	10	6 (minor)	4 (3 minor)
2010	10	6 (minor)	4 (3 minor)

The management of stress in the workplace is part of our health and safety policy. Questions related to stress are included in our staff survey and stress management is included as part of the training curriculum. We also provide a 24-hour confidential employee helpline to support employees on a wide range of issues. We monitor absence to identify possible stress-related absenteeism and conduct return-to-work interviews to assist employees with potential stress related issues.

2011 UPDATE TO FOLLOW

The Group recognises its impact on the local London community in which it operates and is committed to building partnerships within this community. During 2010, we donated a total of £35,938 to community and charitable purposes.

Our preferred charity since 1987 has been Community Links, the inner city charity running community-based projects in East London. Founded in 1977, the charity helps thousands of vulnerable children, young people and adults every year. Most of its work is delivered in Newham, a borough which ranks highly on the index of deprivation.

We also encourage our staff to get involved in charitable activities and match, one-for-one, money raised by them. We set out below the amount of employee-matching grants made over the past three years.

Year	£
2008	35,000
2009	30,435
2010	19,546

 

Suppliers and service providers

We work with suppliers and contractors who deliver their products and services in line with our corporate responsibility aspirations. We are also committed to ensuring that external contractors work under appropriate terms and conditions.

The Group is conscious of the impact its procurement policies can have on the environment. In this regard, a number of initiatives were upheld during 2010 including:

• procurement of 100% recycled paper for all photocopy, printer and business requirements;
• a review of our supply chain to ensure that deliveries are managed as efficiently as possible by amalgamating orders and using local suppliers; and
• a review of supply partners to ensure that there is no conflict between the Group’s environmental objectives and their operational policies.