Dutch state pension fund targets significant environmental reductions across developed equity portfolios.
- Pensioenfonds PGB, one of the top ten largest Dutch State Pension Funds, has announced a collaboration with Osmosis Investment Management to significantly reduce the global environmental impact of its core passive equity exposure.
- Osmosis was selected to construct a bespoke portfolio based on the strong environmental and financial track record of its Core Equity suite of strategies.
- Osmosis has worked with Pensioenfonds PGB to create a developed markets world equity portfolio, which will incorporate PGB’s exclusions while integrating, with tight risk constraints, the proprietary Osmosis Resource Efficiency Factor.
- The portfolio targets a better risk-adjusted return through its overweight exposures to resource-efficient companies and underweight exposures to inefficient companies and delivers an immediate reduction in Carbon, Water and Waste ownership in excess of 50% relative to the current portfolio.
The strategy of Pensioenfonds PGB will replicate the style and risk exposures of their underlying regional equity exposures and target the active portfolio risk towards Osmosis’ proprietary Factor of Resource Efficiency; a sustainable return signal which is the main driver of return in Osmosis’ portfolios. On a sector-relative basis, the strategy overweights companies identified by the Osmosis research program as resource efficient while underweighting those companies identified as resource inefficient.
The Osmosis Model of Resource Efficiency is the product of thirteen years of dedicated in-house quantitative and proprietary environmental data research that involves collecting, cleaning, and standardising the carbon emissions, water consumption and waste generation of over 850 companies worldwide. This process allows for an objective sector-relative evaluation of a corporate’s environmental balance sheets.
Ben Dear, CEO and founding partner of Osmosis, said:
“To partner with Pensioenfonds PGB on this mandate is a testament to the efficacy of our approach and the outcome of several years of collaboration. Investors seeking to address the environmental risk in their portfolios to meet ever more pressing environmental reduction commitments are also cognisant that the active risk required to meet these goals should not lead to sub-optimal financial returns. Delivering immediate and significant environmental reductions while targeting better risk-adjusted returns, our core strategies enable our clients to meet the long-term funding requirements of their customers through a highly diversified, cost-efficient, and liquid portfolio that encourages mainstream adoption of sustainable investing.
We would like to thank PGB for the time, commitment and trust that has gone into forming this partnership. 2022 saw the sustainable investment industry come under increasing pressure and climate-related events increase in scale and magnitude. It is important that the asset management industry continue building innovative solutions to help investors transition their capital. Only through partnerships with forward-thinking investors like PGB will we stand a chance of reaching any of the goals set at Paris, Glasgow, or Sharm El-Sheikh.”
Osmosis has seen record inflows over the past 12 months, counter to the industry trend and
assets under management and advice now exceed $9 billion.
Osmosis launched in 2009 and is majority-owned by management and employees. The company currently manages over $9bn in sustainable assets and is headquartered in London with a growing presence in Europe, North America, and Australia. The company believes that targeting better risk-adjusted returns and delivering significant environmental impacts do not need to be mutually exclusive endeavours. Through their unique 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.
Government Pension Funds, State Pension Funds, Insurance Companies, Foundations, Endowments, Family Offices and Banks are amongst their client roster spanning North and South America, Australia, Mainland Europe, the Nordics, and the UK.
For more information, please contact Lisa Harrison at Osmosis Investment Management [email protected] + 44 7716 912832
This document is issued by Osmosis Investment Management UK Ltd (“OIM UK”), which is regulated in the UK by the FCA. OIM UK is a subsidiary of Osmosis (Holdings) Limited, a London-based investment management group. OIM UK is an affiliate of Osmosis Investment Management US LLC (“OIM US”). 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 and OIM UK. 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 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 Fund is not available for U.S. Investors. A Client’s account will be managed by Osmosis based on the strategy, 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.