Fossil Fuel Transition

Balancing Financial and Fiduciary Duty

Divestment needs to work in the real world.

Excluding fossil fuels can have unintended consequences for portfolio construction.

We focus on managing those effects, helping investors stay true to their commitments without introducing unnecessary risk or distortion.

Departing from the Traditional Approach

Whilst shifting capital to asset-light sectors may fulfil a portfolio’s decarbonisation goals, it ignores the real problem. Without tackling demand, divestment portfolios leave a large proportion of global emissions unaddressed.

METHODOLOGY

Addressing Divestment Challenges

Divesting from fossil fuel companies is simple. We wanted to design a strategy that managed the investment risks and consequences associated with doing so.

Supply vs Demand

Most divestment approaches target the producers of fossil fuels. But demand extends across the entire economy - from transport and industry to technology and consumer goods.

Exclusion is a Risk Problem

Removing stocks from a benchmark introduces sector, industry and stock-specific risks. Our Resource Efficiency framework reallocates that risk towards more efficient companies across the broader economy.

Missed Opportunities

We believe capital should recognise genuine economic transition. Our unique “re-inclusion” criteria rewards positive change by identifying energy companies on a meaningful transition path to cleaner energy sources.

Case Study

Eversource Energy

An ex-fossil fuel re-inclusion case study

Considering a fossil-free investment portfolio?

Osmosis Developed Core Equity Fossil Fuel Transition Fund

Developed to help investors meet their ex-fossil fuel commitments in a sophisticated and risk-controlled developed markets equity portfolio.

Latest Thinking

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