With the undisputable link between carbon emissions and the frequency and severity of climate-related disasters impacting populations around the world, many investors are reviewing their portfolios’ fossil fuel exposure and considering the complex challenges that divestment presents.
The University of Adelaide is the latest in a growing list of universities to commit capital to Osmosis Investment Management’s Resource Efficient ex-Fossil Fuels Fund*. The University of New South Wales in Sydney Australia, and Oxford University Endowment Management (OUem) in the United Kingdom seeded the strategies’ ICAV fund launch in September 2023.
The Resource Efficient Core Equity ex-Fossil Fuels Fund provides investors with a sophisticated investment solution to address the risks and unintended bets bought into portfolios from fossil fuel divestment. The portfolio uniquely addresses both the supply side of fossil fuel energy generation through fossil fuel divestment and the demand side of fossil fuel energy consumption by reallocating the active divestment risk to the most highly correlated resource-efficient companies across the economy.
The strategy was developed in 2020 to protect investors from reflation in fossil fuel commodity prices and the longer-term risks of value destruction as the industry faces increasing regulatory and societal headwinds. The resulting portfolio demonstrates a significantly lower carbon footprint than the benchmark, while also reducing ownership of water and waste, two increasingly important environmental factors.
*This Fund is not available to US investors.
Osmosis CEO Ben Dear said:
“The University of Adelaide is increasingly recognised for its environmental leadership, and we are delighted they have chosen Osmosis’ Ex-Fossil Fuels Strategy to further strengthen their climate ambitions. It is crucial when seeking to remove exposure to fossil fuels, that additional mitigation is undertaken to deal with demand as well as supply. Our Core Equity Ex-Fossil Fuels strategy achieves this while also reducing the portfolio’s exposure to water and waste.”
Key Features of the Osmosis Strategy
- Differentiated approach excludes fossil fuel supply whilst addressing demand through the over and underweighting of Resource Efficient companies across 34 additional economic sectors.
- Strict environmental screens prohibit investment in companies with >5% of their revenues from fossil fuels or nuclear power. The Fund also excludes companies with any revenue from controversial weapons, civilian firearms, and tobacco manufacturing and those companies in breach of the UN Global Compact Principles.
- “Transition re-inclusion” criteria rewards positive change by investing back into companies on a meaningful transition path to cleaner energy sources (>50% renewable energy generation)
- By maintaining tight country, industry, and sector weights to the benchmark the Fund addresses concerns that fossil fuel divestment products can lead to inadvertent concentration risk in certain sectors.
- Through targeting the risk budget towards resource-efficient companies on a sector-relative basis the strategy has performed in line with the MSCI World Index since its initial launch in 2021, despite unprecedented supply and demand pressures and the subsequent rally in fossil fuel prices
- Portfolio has delivered significant reductions in ownership of Carbon (-71%), Water (-64%), and Waste (-58%) relative to the MSCI World (as of end February 2025).
The ex-Fossil Fuels strategy (which was originally launched as a CCF in 2021) and is also available in segregated accounts, has seen significant growth in assets, which in aggregate totalled USD $1.75 billion (AUD $2.7 billion) as of the end of February 2025. Osmosis’s Core Equity Range now manages over USD $16.5 billion (AUD $25 billion).
About Osmosis
Osmosis currently manages $17.8bn** in sustainable assets and is headquartered in London, with a growing global presence. Osmosis believes that targeting better risk-adjusted returns and delivering significant environmental impact do not need to be mutually exclusive endeavours. Through its innovative Model of Resource Efficiency, the company has demonstrated that sustainability metrics, if quantifiable and objective in nature, can be applied to mainstream equity portfolios to generate alpha.
The Osmosis team of quantitative environmental analysts and portfolio managers is singularly focused on delivering three levels of impact. Better risk-adjusted returns, measurable environmental reductions, and an active engagement programme to promote better corporate environmental disclosure.
Osmosis counts Government Pension Funds, State Pension Funds, Insurance Companies, Foundations, Endowments, Family Offices, and Banks amongst their client roster spanning the UK, Europe, the Nordics, North and South America, Asia, and Australia.
**Assets under management and advisory as of 28 February 2025. Osmosis Investment Management AUM includes discretionary assets under management of OIM US and OIM UK and assets invested in model programs provided by OIM US, OIM AUS and OIM UK.
For more information about Osmosis, please visit www.osmosisim.com
If you have any questions regarding this press release, please contact Lisa Harrison at [email protected] at +44 7716 912832 (UK hours) or Dennis Mothoneos at Clearway Capital on +61 409 312 096 (AUS hours).
Important Information
This document is issued by Osmosis (Holdings) Limited, a London-based investment management group. Osmosis Investment Management UK Ltd (“OIM UK”) is an affiliate of Osmosis Investment Management US LLC (“OIM US”) and Osmosis Investment Management (Australia) Pty Ltd (“OIM AUS”). OIM UK is regulated by the FCA, OIM US is a registered investment adviser with the SEC, and OIM AUS is a corporate authorised representative of Eminence Global Asset Management Pty Ltd (AFSL 305573). Osmosis Investment Management AUM includes discretionary assets under management of OIM US and OIM UK and assets invested in model programs provided by OIM US, OIM AUS and OIM UK.
NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFIT OR LOSSES SIMILAR TO THOSE SHOWN. The Osmosis Resource Efficient Core Equity ex Fossil Fuels Fund is not available for U.S. Investors. A Client’s account will be managed by Osmosis based on the Fund, but the actual composition and performance of the account may differ from the Fund due to differences in the timing and prices of trades, and the identity and weightings of securities holdings.
For more information, please contact Lisa Harrison on +44 7716 912832 or [email protected]