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On ESG complexities

Leading the transition to a sustainable and just future more decisively

On ESG complexities

E, S, and G are three connected categories. Yet, each category covers a wide-ranging set of distinct challenges. ESG rating agencies use hundreds of indicators to measure a firm’s performance on the numerous diverse concepts within each category —carbon emissions in the E, workplace safety in the S, and board independence in the G, to name a few. Not only are there many different ways of measuring E, S, and G, but the task is further complicated by the fact that the three categories are also often closely interlinked. Yet, the issues within each category are by themselves extremely complex, and it is becoming increasingly difficult to address them all within the overarching ESG framework.

The interrelations and complexities of ESG issues caution against a general-purpose approach, where impact is lost by trying to solve too many issues at once. Choosing a specialised over a generalised approach can lead to a big advancement on a single issue, which may be more impactful than small advancements on many fronts.

Our view

Our view: At Osmosis, we specialise and focus on the E—the environmental dimension—applying our Model of Resource Efficiency to identify opportunities across all economic sectors. Over time we have developed extensive knowledge and expertise to assess corporate environmental performance and incorporate it into well-diversified and risk-controlled investment strategies. Our products offer substantially reduced environmental footprints (see Figure 1), while also performing well on the untargeted but captured social and governance dimensions (see Figure 2).


Picture 1

Figure 1. This figure shows the carbon emission, water, and waste footprints of companies in the diversified Osmosis Smart Beta fund relative to the MSCI World Index.



Tom square

Dr. Tom Steffen

Quant Research

More about the author

In this article we look at what the investment community needs to do better in order to use its substantial influence to lead the transition to a sustainable and just future more decisively.

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Important Information

This document is issued by Osmosis Investment Management US LLC (“Osmosis”). Osmosis Investment Management UK Limited (“Osmosis UK”) is an affiliate of Osmosis and has been operating the Osmosis Model of Resource Efficiency. Osmosis UK is regulated by the FCA. Osmosis and Osmosis UK are both wholly owned by Osmosis (Holdings) Limited (“OHL”).


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For more information on this article or any of Osmosis' funds and strategies please contact [email protected] or call +44 203 928 6558.