Responsible Investment

What is Responsible Investment?

Responsible Investment is the term Henderson uses to cover its work on corporate governance and corporate responsibility (or social, environmental and ethical issues) in the companies in which we invest on clients' behalf, across all our funds. Together these are sometimes referred to as 'environmental, social and governance' issues (ESG).

Our Responsible Investment work enables us to help UK pension funds fulfil the requirement under the Pensions Act to include a policy on social, environmental and ethical issues, and on voting, in their Statement of Investment Principles.

In addition to this Responsible Investment work, Henderson provides a range of specialist Sustainable and Responsible Investment (SRI) funds. Visit the SRI Funds website.

Corporate governance

Good corporate governance is fundamental to ensuring that companies are well managed, deliver long-term returns to their shareholders and are accountable to them, and take account of their wider responsibilities to society. Board structures need to ensure that no one person is able to exercise undue influence and power and that key areas such as audit, executive remuneration and nominations to the board receive appropriate attention. Non-executive directors with appropriate skills, backgrounds and independence should both contribute to the company's strategy and monitor the performance of executive management. Policy on executive remuneration should be clearly articulated, and rewards clearly linked to demanding levels of performance.

Corporate responsibility

Henderson also believes that good management of a range of responsibilities towards different stakeholders contributes to business success and long-term shareholder value. This embraces:

economic responsibilities to shareholders and to behave fairly and legally in the marketplace, towards consumers, suppliers and competitors
responsibilities to minimise and manage environmental impacts
responsibilities towards employees
responsibilities to the wider community

We expect all the companies we invest in to have a code of conduct and policies based wherever possible on recognised international standards in these areas, and to include information on their performance in their Annual Report and separate specialist reporting. We encourage companies to follow the guidelines of the Global Reporting Initiative.

Henderson policy

Henderson's Responsible Investment Policy sets out our approach to corporate governance and corporate responsibility for all the companies in which we invest, and our policy on proxy voting. The Policy also sets out how Henderson implements the UK Institutional Shareholders' Committee's Statement of Principles on the Responsibilities of Institutional Shareholders and Agents.

For further information on our responsible investment work, please contact Antony Marsden, Corporate Governance Manager, antony.marsden@henderson.com

How we implement our policy

Overview

We implement our Responsible Investment Policy through research, engagement and voting.

Research and engagement

We analyse information provided by companies themselves, use the services of specialist research providers on corporate governance and corporate responsibility, use research by brokers' analysts and utilise relevant information from sources such as environmental organisations, trades unions and government agencies. We supplement this with active engagement, or dialogue, with companies. This allows us to gather additional insights - on business strategy and its execution, corporate governance and corporate responsibility - that enhance our understanding of a company's strategy and the likelihood that management will be successful in delivering it in a way that serves shareholders' interests.

The insights gained from our engagement are fed into our investment decision-making process. Information on companies' corporate governance and corporate responsibility practices and performance are available to all fund managers and analysts, and form part of the overall pool of information on which they draw. Frequent discussion takes place between governance and corporate responsibility specialists and sector analysts and fund managers.

Where we conclude that a company's management of key issues is inadequate, engagement becomes a process by which we seek to exercise influence for improvement. We take an active approach to making our views clear to companies and seeking improvements where we believe there are shortcomings in performance, or a company has failed to apply appropriate standards, or to provide adequate disclosure. We will continue our dialogue with the company over an extended period if necessary.

If we are unable to resolve the matter through this dialogue, we may work with other institutional investors to put our concerns to the company jointly. We also have the option of using the voting rights held on behalf of clients to impress upon management the need for change or ultimately to support a takeover.

We also undertake programmes of engagement focusing on specific themes and sectors. These are prioritised according to the significance of the issue in business terms for the company or companies concerned, the scale of our shareholding in the company, the likelihood that we can exercise influence and the seriousness of the issue as a precedent for inappropriate practice by other companies.

Voting

We exercise voting rights on behalf of clients at meetings of all UK companies in which we have a holding. We will not support board proposals which, in our view, are not in the best interests of shareholders. Where we have taken a decision not to support a company's proposals, it is our policy to inform the company of our intentions and the rationale for our decision prior to voting.

Outside the UK we vote on behalf of certain clients and in priority cases.

Voting reports

At Henderson we take an active interest in the corporate governance of companies in which we invest. We believe that voting at general meetings is an important aspect of corporate stewardship and a means of signalling shareholder views on board policy, practices and performance.

When assessing board resolutions, our voting recommendations are guided by the best interests of shareholders. Where we have taken a decision not to support board proposals, we take an active approach to informing the company of our intentions and the rationale for our decision prior to voting.

The Voting Reports below set out our house view on issues where we did not support a company's management. This shows how we voted on behalf of the retail (i.e. individual) clients who invest in our unit trusts. Some of our institutional clients follow this house view, while others give us specific voting instructions according to their own policy. The vote recommendations and rationale expressed in the Voting Reports therefore do not necessarily reflect how a specific institutional client's shares were voted.

The views expressed are the opinion of Henderson Global Investors and reflects the way Henderson acted based on available information. It should not be relied upon for any other purpose.

UN Principles for Responsible Investment

In May 2005 Henderson Global Investors became a founding signatory to the United Nations Principles for Responsible Investment. The Principles, developed under the auspices of the UN Secretary-General, are a voluntary and aspirational framework for incorporating environmental, social and corporate governance (ESG) issues into mainstream investment decision-making and ownership practices. View details of how Henderson is implementing the Principles.

Research

We conduct our own research and engagement on ESG issues. Subjects we have tackled in the past include tax policy, carbon disclosure, ESG & executive remuneration, responsible lending and workplace stress. For more information see the document library in our SRI website.

Team members

Antony Marsden – Corporate Governance Manager

Antony is Corporate Governance Manager, responsible for implementing Henderson's UK Responsible Investment Policy across the companies in which Henderson invests. Prior to joining Henderson, Antony spent more than six years at PIRC, the corporate governance consultancy, in a variety of roles. Whilst at PIRC he managed the European Corporate governance Service (ECGS), an alliance of independent organisations specialising in governance research and proxy voting advice on Europe's largest quoted companies. He has a degree in Politics and International Studies from the University of Warwick and an MSc with distinction in Corporate Governance and Ethics from Birkbeck College, University of London.

Seb Beloe – Head of SRI Research

Seb joined Henderson in 2008 as Head of SRI research. He leads on the identification and analysis of critical sustainability and responsibility issues with investment relevance for the SRI funds. In addition, Seb guides and oversees the research team's communication and engagement with companies, the investment community, government and civil society to enhance and promote understanding of sustainability, corporate responsibility and SRI matters. He joined from SustainAbility where he was vice president, research and advocacy. In this role Seb was responsible for the overall direction and content of research and advocacy activities and spent nine years based in both London and New York. Seb has expertise in helping businesses develop strategic responses and practical solutions to social and environmental issues and has a background in environmental technology and environmental science. He has an MSc DIC from Imperial College in Environmental Technology and an undergraduate degree in Environmental Science from the University of East Anglia.

My-Linh Ngo - Associate Director, SRI Research

My-Linh works closely with Seb and Hyewon in developing and implementing the SRI research and engagement process at Henderson. She is responsible for sustainability and corporate responsibility analysis engagement for the SRI funds. My-Linh is currently a member of Reuters' Corporate Responsibility Advisory Committee, and the Environmental, Health & Safety stakeholder panel at GlaxoSmithKline. She joined the SRI team in 2000 having completed an MProf. Leadership for Sustainable Development. Her first Masters was in Environmental Impact Assessment, Auditing & Environmental Management Systems. My-Linh also has a BSc (Hons) degree in Environmental Science.

Hyewon Kong - Junior Analyst

Hyewon works closely with Seb and My-Linh within the SRI research team. Her analyst role involves conducting sustainability and corporate responsibility analysis for the purposes of SRI investment. She also provides investment support for the team. Prior to joining Henderson in 2007, Hyewon worked in a similar SRI analyst role at Jupiter Asset Management. Before that, she interned at the UK Social Investment Forum (UKSIF), and Business in the Community. Hyewon holds an MSc in Nature, Society and Environmental Policy from Oxford University, as well as a B.A. in Russian Studies and English Studies from Korea.

Affiliations

As part of our commitment to responsible investment, Henderson is involved in a wide range of ESG related initiatives as a member, supporter or in an advisory capacity. These initiatives include:

Initiative	Decription
Access to Medicine Index http://www.atmindex.org/	The initiative is led by the Access to Medicine Foundation, whose aim is to advance access to health care in developing countries and, in particular, to encourage the pharmaceutical industry to accept a bigger role regarding access to medicine in pre-industrialized countries. The Access to Medicine Index provides ratings of large pharmaceutical companies according to their efforts in providing people in low income countries with affordable drugs, diagnostics and vaccines. A Henderson employee sits on the Advisory Board of the Access to Medicines Foundation.
Extractive Industries Transparency Initiative EITI) http://eitransparency.org/	The Extractive Industries Transparency Initiative (EITI) supports improved governance in resource-rich countries through the verification and full publication of company payments and government revenues from oil, gas and mining. Henderson is a signatory of the Investors' Statement on Transparency in the Extractives Sector.
Institutional Investors Group on Climate Change (IIGCC) http://www.iigcc.org/	The Institutional Investors Group on Climate Change (IIGCC) is a forum for collaboration between pension funds and other institutional investors on issues related to climate change. IIGCC seeks to promote better understanding of the implications of climate change amongst institutional investors and to encourage companies and markets in which IIGCC members invest to address any material risks and opportunities to their businesses associated with climate change and a shift to a lower carbon economy. Henderson is a founder member and is represented on the public policy committee.
National Association of Pension Funds (NAPF) http://www.napf.co.uk/	The NAPF is the representative organisation for workplace pensions in the UK. It has membership in excess of 1300, between them providing pensions to more than 10 million working people with combined assets in excess of £800 bn. Henderson employees sit on the Investment Council and the Shareholder Affairs Committee.
Social Investment Forum (SIF) http://www.socialinvest.org/	The Social Investment Forum (SIF) is a national membership association dedicated to advancing the concept, practice and growth of SRI in the US. SIF membership includes more than 500 social investment practitioners and institutions. Henderson is a member of SIF.
UN Principles for Responsible Investment (PRI) http://www.unpri.org/	Founded in early 2005 by UNEP FI and the UN Global Compact, the PRI is a set of voluntary and aspirational principles giving a framework for the integration of ESG issues into mainstream investment decision making and ownership practices. The PRI has become the pre-eminent reference point for evaluating the commitment of institutional investors to responsible investment. Henderson is a founding signatory, joining up in May 2005.
UK Social Investment Forum (UKSIF) http://www.uksif.org	UKSIF is the UK's membership network for sustainable and responsible financial services. UKSIF promotes responsible investment and other forms of finance that support sustainable economic development, enhance quality of life and safeguard the environment. It also seeks to ensure that individual and institutional investors can reflect their values in their investments. Henderson is a member of UKSIF, and is represented on the UKSIF Research Advisory Group.
UN Environment Programme Finance Initiative (UNEP FI) http://www.unepfi.org/	UNEP FI is a global partnership between UNEP and the financial sector. More than 160 institutions, including banks, insurers and fund managers, work with UNEP to understand the impacts of environmental and social considerations on financial performance. Henderson is represented on the Asset Management Working Group (AMWG).