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Osmosis Investment Management

PRI reporting framework 2020

You are in Strategy and Governance » ESG issues in asset allocation

ESG issues in asset allocation

SG 13. ESG issues in strategic asset allocation

13.1. Indicate whether the organisation carries out scenario analysis and/or modelling, and if it does, provide a description of the scenario analysis (by asset class, sector, strategic asset allocation, etc.).

Describe While Osmosis' Model of Resource Efficiency is developed to assess companies only on their current resource use, including carbon emissions, water consumption and waste generation, We also perform analysis using scenario analysis tools like SBTi and TPI to assess the level of climate ambition in our portfolios.

13.2. Indicate if your organisation considers ESG issues in strategic asset allocation and/or allocation of assets between sectors or geographic markets.

We do the following

          Osmosis stock selection is entirely based on the output of the Model of resource Efficiency. Please refer to 13.3 for details.
        

13.3. Additional information. [OPTIONAL]

The Osmosis model of resource efficiency (MoRE) is a multi-factor systematic process which assimilates objective environmental-based factors of resource intensity with a market-based factor of economic value to produce a robust investment portfolio of sustainable resource efficient businesses.

Stock selection is systematic and based on three resource intensity factors:

• Energy; by measuring the observed and reported level of absolute greenhouse gas emissions from fossil fuel combustion, industrial processes and other sources owned or controlled by a company;

• Water; by calculating the cost of water used in the production process of a company purchased directly for operations or abstracted for use from local supply;

• Waste; by calculating the total costs generated from the disposal of waste in normal company operations, classified as landfill, incineration or recycling and including nuclear waste.


SG 13 CC.

13.4 CC. Describe how your organisation is using scenario analysis to manage climate-related risks and opportunities, including how the analysis has been interpreted, its results, and any future plans.

Describe

While Osmosis' Model of Resource Efficiency is developed to asses companies only on their current resource use, including carbon emissions, water consumption and waste generation, we have performed analysis using scenario analysis tools like SBTi and TPI to assess the level of climate ambition in our portfolios. These tools are created using climate scenarios from the International Energy Agency (IEA, the 2 Degree Scenario) and the Intergovernmnetal Panel on Climate Change (IPCC, RCP2.6). This analysis is used as an input into our active ownership engagement strategy.

13.5 CC. Indicate who uses this analysis.

13.6 CC. Indicate whether your organisation has evaluated the potential impact of climate-related risks, beyond the investment time horizon, on its investment strategy.

Describe

The Osmosis Model of Resource Efficiency seeks to identify those companies that are creating more with less and who will lead a just transition to a more sustainable future. The model encourages an all economy approach which aims to facilitate mainstream adoption of sustainable investment principles.  This is not limited to our investment time horizon. 

13.7 CC. Indicate whether a range of climate scenarios is used.

13.8 CC. Indicate the climate scenarios your organisation uses.

Provider
Scenario used
IEA
IEA
IEA
IEA
IEA
IRENA
Greenpeace
Institute for Sustainable Development
Bloomberg
IPCC
IPCC
IPCC
IPCC
Other
Other
Other

SG 14. Long term investment risks and opportunity

14.1. Some investment risks and opportunities arise as a result of long term trends. Indicate which of the following are considered.

14.2. Indicate which of the following activities you have undertaken to respond to climate change risk and opportunity

Specify the AUM invested in low carbon and climate resilient portfolios, funds, strategies or asset classes.

Total AUM
trillions billions millions thousands hundreds
Currency
Assets in USD
trillions billions millions thousands hundreds

Specify the framework or taxonomy used.

100% of the firm's assets are managed under the Model of Resource Efficiency.

other description

          Osmosis integrates water ﹠ waste into the resource efficiency metric alongside energy usage (CO2e).
        

14.3. Indicate which of the following tools the organisation uses to manage climate-related risks and opportunities.

other description

          Osmosis  additionally integrates  water & waste disclosures into the resource efficiency metric alongside energy usage (CO2e)
        

14.5. Additional information [Optional]


SG 14 CC.

14.6 CC. Provide further details on the key metric(s) used to assess climate-related risks and opportunities.

Metric Type
Coverage
Purpose
Metric Unit
Metric Methodology
Carbon footprint (scope 1 and 2)
          Osmosis calculates the portfolio environmental footprint and uses it as a key metric to define the success of the portfolio.
        
          tCO2e; m3 water consumption; t waste generation
        
          The portfolio footprints are calculated using an ownership approach, based on Osmosis proprietary database.
        
Portfolio carbon footprint
          Osmosis calculates the portfolio environmental footprint and uses it as a key metric to define the success of the portfolio. These footprints are communicated quarterly to our clients.
        
          tCO2e/million $ revenue; m3 water/million $ revenue, tonnes of waste/million $ revenue
        
          The portfolio footprints are calculated using an ownership approach, based on Osmosis proprietary database.
        
Total carbon emissions
          Osmosis calculates the portfolio environmental footprint and uses it as a key metric to define the success of the portfolio.
        
          tCO2e; m3 water consumption; t waste generation
        
          The portfolio footprints are calculated using an ownership approach, based on Osmosis proprietary database.
        
Carbon intensity
          Osmosis calculates the portfolio environmental footprint and uses it as a key metric to define the success of the portfolio.
        
          tCO2e/million $ revenue; m3 water/million $ revenue, tonnes of waste/million $ revenue
        
          The portfolio footprints are calculated using an ownership approach, based on Osmosis proprietary database.
        
Other emissions metrics
          
        
          
        
          
        

14.8 CC. Indicate whether climate-related risks are integrated into overall risk management and explain the risk management processes used for identifying, assessing and managing climate-related risks.

Please describe

The Osmosis Model of Resource Efficiency seeks to identify those companies that are creating more with less and who will lead a just transition to a more sustainable future. The model encourages an all economy approach which aims to facilitate mainstream adoption of sustainable investment principles. While our model does not originate from a risk management approach, but rather from a believe that efficient comapnies will outperform their innefficient peers, putting key environmental data at the heart of our investment process has benefits for transition and physical climate-related risks and opportunities. This is not limited to our investment time horizon. 

14.9 CC. Indicate whether your organisation, and/or external investment manager or service providers acting on your behalf, undertake active ownership activities to encourage TCFD adoption.

Please describe

Osmosis engages with companies both in and outside of its portfolios to encourage them to disclose extensive environmental information in their annual reports. Osmosis recognizes that the TCFD is one of the most advanced way of incorporating environmental data into mainstream reporting, however, acknowledges that companies can incorporate data in other ways as well.


SG 15. Allocation of assets to environmental and social themed areas

15.1. Indicate if your organisation allocates assets to, or manages, funds based on specific environmental and social themed areas.

15.2. Indicate the percentage of your total AUM invested in environmental and social themed areas.

100 %

15.3. Specify which thematic area(s) you invest in, indicate the percentage of your AUM in the particular asset class and provide a brief description.

Area

Asset class invested

100 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

The Model of resource efficiency and all of our portfolios target those companies who utilise less energy ( carbon ) water and produce less waste than their same sector peers per unit of revenue created.

Asset class invested

100 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

The Model of resource efficiency and all of our portfolios target those companies who utilise less energy ( carbon ) water and produce less waste than their same sector peers per unit of revenue created.

          The Model of resource efficiency and all of our portfolios target those companies who utilise less energy ( carbon ) water and produce less waste
        

Asset class invested

97 Percentage of AUM (+/-5%) per asset class invested in the area
03 Percentage of AUM (+/-5%) per asset class invested in the area

Brief description and measures of investment

Osmosis Investment Management believes its unique sustainable investment approach places it at the forefront of stewardship in the context of governance and responsibility towards efficient use of resources.  Through the allocation of capital that has been entrusted to it, Osmosis is proactively directing capital to companies which are more resource efficient than their sector peers. We believe that efficient use of resources within a company demonstrates good corporate governance and is key to helping these companies maximise returns over time. Through this approach, we believe we will maintain, enhance and protect value to clients over the longer term.  Those companies which our model selects for investment display additional characteristics which investors deem attractive, as such resource efficiency can be viewed as a proxy for quality.

15.4. Please attach any supporting information you wish to include. [OPTIONAL]



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