A Critical Moment for Climate Action – Thinking Beyond the Short Term
Recent extreme weather events have once again reinforced the urgency of the climate crisis, not least in the US where not long after the devastation in Los Angeles (so quickly and conveniently forgotten by many) wildfires have yet again made headline news. This month we have also witnessed life threatening flooding in Indonesia, Argentina, Spain and Australia, as well as record-breaking temperatures for March in multiple cities across the US, Asia and Europe. Meanwhile the release of the UN’s World Meteorological Organizations State of the Climate Report 2024, the hottest year in its 175-year observational records, warns that global carbon emissions continue to rise and will bring even worse impacts. All to say, climate change is not a distant concern that we can put on temporary hold.
In the US, policy rollbacks, coal revivals and shifting climate commitments continue to obscure and distract from the reality and we must resist the temptation of short-termism. Tariffs, Russia/Ukraine and the Middle East are rightly headline news, the unpredictability is a strategy, but to only focus on the immediate challenges – the next quarter, the latest policy shift, the headlines of the day – and to ignore the climate (an enemy that knows no borders) is threatening not just the balance sheets of companies but the lives of millions worldwide. Climate change operates on a different timescale, and our collective response must continue to reflect that.
Despite the chaotic, often alarming and sometimes depressing rhetoric and actions being taken, I have been encouraged by the many conversations I have had with investors and consultants in recent weeks not just here in Europe but also in Australia and the US. There is a crucial force stepping up within our ranks – responsible institutional asset owners and pension funds are making a stand. Their informed commitment to sustainability, risk mitigation, and long-term portfolio resilience is becoming an important last line of defence.
This month we saw The People’s Pension and Denmark’s AkademikerPension pull mandates from State Street Global Advisors, the former citing a misalignment in stewardship and engagement on sustainability, and the latter responsible investment concerns. Meanwhile, Hong Kong’s multi-billion dollar central bank fund has called on managers to share its ESG convictions, reiterating its support for sustainability and climate considerations.
I am also encouraged by the many industry campaigns which continue to hold corporations accountable. Our own non-disclosure campaign, which is backed by over $750 billion of institutional assets is just one example (as at end Feb 2025) . Climate risk is financial risk and whether Trump likes it or not, it will remain a balance sheet risk.
Finally, I am encouraged that Osmosis is still expanding and onboarding a steady flow of assets despite the ESG headwinds, although it is understandable that the pace of flow is slowing while allocators navigate such turbulent macro shifts. New flow, and with some clients reupping exposure, is a testament to our focused, evidenced based, tightly risk controlled and alpha targeted approach to mitigating environmental risk in our portfolios.
After 17 years of managing equity portfolios, our long term mission to expand into new asset classes became a reality this month as we formally announced our expanding capabilities into Fixed Income with the launch of Osmosis Netherlands BV. The business has been established in Rotterdam and is led by Victor Verberk, who was previously CIO of fixed income and sustainability at Robeco. Bringing a new asset manager to life is both challenging and complex and we are incredibly grateful to be working in partnership with The Oxford University Endowment Fund and Australia’s Commonwealth Superannuation Corporation on this venture. We will be formally reaching out to investors once regulatory approvals have been granted.
We also announced the launch (and now bookbuilding) of an Emerging Markets UCITS Fund (register for our online event), and we welcomed Wealth Manager Perpetual Private to our growing list of Australian investors. Perpetual Private has added the Osmosis Resource Efficient Core Equity Fund to its multi manager programme with an initial investment of AUD 60 million via a separate account.
On that positive note, I will sign off. But please do get in touch if you are concerned about the current market / political volatility or would like to discuss any of our investment strategies.
Sincerely,
Ben
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