Press Release
Hertfordshire Pension Fund has partnered with sustainable investment manager Osmosis Investment Management to launch a £100m resource efficient global equity portfolio. The allocation takes Osmosis’ Local Government Pension Scheme (LGPS) AUM to over 1 billion GBP.
This mandate forms part of Hertfordshire’s ongoing commitment to address the investment challenges that climate change and energy transition present to their passive equity holdings and has been supported by their investment consultant Mercer.
Osmosis will advise on the equity strategy, with UBS Asset Management acting as Investment Manager under the current Passive Service Agreement, as set out by the UK National LGPS Framework. The Hertfordshire Pension Fund (the Fund) is part of the ACCESS Local Government Pension Scheme (LGPS) Pool. The Fund provides pension benefits on behalf of 529 employers and 123,922 members.
Over the past two years, underpinned by a set of ESG beliefs and a robust Statement of Responsible Investment Principles, the Pension Fund has made significant progress in addressing climate change risk. The Fund believes the decarbonisation challenge involves portfolio action across all sectors and geographical regions, considering both the cause and effect of climate change risk. It has identified and sought to remove structural and unconscious exposure to climate risks by restructuring its equity positions by removing traditional passive investments and investing in climate opportunities.
Councillor Andrew Williams MBE, Chair of Hertfordshire Pension Committee, said:
“The Hertfordshire Pension Fund is happy to partner with Osmosis Investment Management by investing in their Resource Efficient Core Equity Strategy. The Hertfordshire Pension Fund Committee, as part of its evolving approach to responsible investment, has agreed a challenging transition path line to become net zero by 2050. The Fund will look to target investment in strategies that address risks such as climate risk and the efficient use of natural resources. This investment with Osmosis is a clear demonstration of the Fund’s commitment to managing these risks and responsible investment generally.”
Ben Dear, CEO at Osmosis Investment Management, said:
“We are delighted that the Hertfordshire Pension Fund has selected the Osmosis Resource Efficient Core Equity Strategy to further strengthen their climate ambitions. The pension fund shares our belief that the efficient use of finite natural resources is critical to the future health and wealth of our planet and that addressing these externality risks at a portfolio level can not only reduce these environmental risks but also, if the allocation of risk is managed utilising our factor of resource efficiency, contribute to long-term economic returns.”
The Hertfordshire Pension Fund portfolio will replicate the Osmosis Core Equity Fund**, which was first launched in May 2017. This latest investment will bring the total AUM in Osmosis’s Core Equity Strategies to over $16.bn*.
The Osmosis Resource Efficient Core Equity Strategy seeks superior risk-adjusted returns by targeting maximum resource efficiency exposure while maintaining a tight tracking error to the MSCI World. The portfolio takes advantage of the inefficiencies of market cap weighted strategies by closely replicating the factor exposures of the underlying benchmark with the active exposure being delivered through the Osmosis Resource Efficiency Factor. The strategy excludes tobacco and companies that breach the UN Global Compact’s social and governance safeguards.
Since its launch, the strategy has delivered an average carbon intensity reduction of 60%, a reduction in water consumption of 68%, and a reduction in waste generation of 64% relative to the MSCI World Index.
*Assets under management and advisory as of 31 August 2024.
**This Fund is not available to US investors.