The Planet Isn’t Cooling and Neither Should Our Focus
The past month has been a loud wake-up call. May was officially the world’s second warmest ever recorded, exceeded only by May 2024, according to the EU’s Copernicus Climate Change Service. Parts of northwestern Europe saw their lowest precipitation and soil moisture levels since at least 1979. The World Meteorological Organization now forecasts that global average temperatures are likely to remain at or near record highs for the next five years – an outlook that aligns with what we’re already witnessing in real time.i
According to Cornucopias, global sea surface temperatures are also flirting with record highs, driven by relentless emissions and exacerbated by marine heatwaves. At the Ocean Conference in Nice, world leaders were unequivocal: the planet’s blue lungs are under siege, and we are failing to protect them. A bright spot: the High Seas Treaty gained new momentum, with a surge in ratifications moving us closer to safeguarding 30% of the world’s oceans under international law.ii
On land, the headlines were grim. Wildfires tore through Canada’s northwest yet again. Nigeria, China, South Africa and the US all endured deadly, displacing floods. Flashfloods in Texas, triggered by the heaviest rainfall in more than a decade, have killed at least 11 people with several people still reported missing.
Policy Whiplash and disinformation from Washington
Despite the physical evidence of climate change building in both frequency and severity, America’s climate agenda continues to take a hard U-turn. The administration announced a repeal of Biden-era power plant rules designed to curb climate pollution, scrapping regulation of the second-largest U.S. emissions source: the electricity sectoriii . Meanwhile Climate.gov, the gateway website for the national Oceanic and Atmospheric Administration, which supports public education on climate science will likely shut down after almost all of its staff were fired.
That’s not all. Trump’s Environmental Protection Agency (EPA) also moved to weaken mercury limits on power plant emissions, roll back California’s vehicle emissions standards, and squeeze clean-energy tax credits. And Trump himself remains one of the most vocal skeptics of efforts to tackle climate change; his tirade against wind energy last week – claiming turbines are ugly and disgusting, dangerous to whales and more expensive than traditional fuels – is just one instance in many.
Markets in Flux
On the macro front, uncertainty reigns. The OECD has downgraded its U.S. growth forecast to 1.6% in 2025 and 1.5% in 2026, citing the drag from tariffs imposed during Trump’s renewed trade war with Chinaiv. A fragile “framework” for cooperation emerged from recent U.S.–China talks, but concrete progress remains elusive.
After reaching record highs in early May, equity markets are now beginning to retreat. The escalating conflict in the Middle East has seen oil prices surgev. Friday saw the biggest one day move in the price of crude since March 2022, after Russia invaded Ukraine. This renewed volatility in energy markets is likely to influence inflation expectations and weigh on broader risk sentiment in the near term.
Times are challenging, but we believe a shift is brewing. 2023 – 2025 has marked the longest economic recovery phase since 1980. But as momentum starts to fade and fundamentals begin to matter again, firms with low leverage, resilient margins, and stronger pricing power (all attributes we can attribute to our resource efficient stocks) are likely to come back into favour. Our latest model insights into the effect of Economic Cycles on Resource Efficiency is attached to this newsletter.
Fund name Changes: Labels alone don’t tell the story
In Osmosis news this month, we have renamed our suite of Resource Efficient funds and strategies to align with the new European Securities and Markets Authority (ESMA) guidelines, which require that funds using descriptors like “sustainable,” “green,” or “impact” can demonstrate that at least 80% of their holdings align with defined ESG characteristics. While in principle, this raises the bar, in practice it creates unintended challenges for investors. Our opinion is that investing should be judged on the basis of evidence rather than a label: Is there a clear, verifiable methodology? Is impact measured, monitored, and reported transparently? For a full breakdown of the changes and rationale behind them, please refer to our public update here: Fund Name Changes to Comply with ESMA.
Fixed Income : It’s go time!
At a time when many large asset managers are pulling back from sustainable investing, reducing both their exposure and in-house capabilities, doubling down on environmental sustainability can seem contrarian. But we see an opportunity. Our new fixed income business is marching full steam ahead, with 11 full time staff members already onboarded and two UCITS credit funds launching imminently, we are expanding our capabilities and moving further toward our goal of becoming the world’s leading cross-asset, sustainably focused investment manager. In a Citywire interview with fixed income CEO/CIO Victor Verberk, Chris Sloley captures our mission, the entrepreneurial partnership, and talks about the AI technology behind the new venture. See It’s go time: Inside the launch of a sustainable bond boutique
On that positive note, I would like to thank you for your continued trust and commitment as we move forward. In uncertain times, a shared conviction matters more than ever.
Best regards,
Ben Dear
CEO, Osmosis Investment Management
Sources:
[i] https://wmo.int/news/media-centre/global-climate-predictions-show-temperatures-expected-remain-or-near-record-levels-coming-5-years
[ii] https://www.theenergymix.com/high-seas-treaty-gains-momentum-with-surge-in-support/
[iii] • Politico – Trump EPA Repeals Power Plant Climate Rules (June 2025)
[iv] https://www.reuters.com/world/china/oecd-trims-global-outlook-trump-trade-war-hits-us-growth-2025-06-03/
[v] https://www.cnbc.com/2025/06/15/oil-prices-jump-after-israel-strikes-energy-facilities-in-iran.html.