The Hertfordshire Pension Fund has partnered with Osmosis Investment Management to launch a £100m resource-efficient global equity portfolio.
The scheme’s portfolio will replicate the Osmosis Core Equity Fund, which was first launched in May 2017.
This mandate is part of Hertfordshire’s ongoing commitment to address the investment challenges that climate change and energy transition present to its passive equity holdings. It has been supported by investment consultant Mercer.
Osmosis will advise on the equity strategy, with UBS Asset Management acting as investment manager under the current Passive Service Agreement, as set out by the UK National LGPS Framework.
The Hertfordshire Pension Fund is part of the ACCESS LGPS pool and provides pension benefits on behalf of 529 employers and 123,922 members.
Osmosis noted that over the past two years, underpinned by a set of ESG beliefs and a robust Statement of Responsible Investment Principles, the pension fund has made significant progress in addressing climate change risk and has identified and sought to remove structural and unconscious exposure to climate risks by restructuring its equity positions by removing traditional passive investments and investing in climate opportunities.
The allocation takes Osmosis’ Local Government Pension Scheme (LGPS) assets under management (AUM) to over £1bn.
Last year Cambridgeshire and Northamptonshire pension funds partnered with Osmosis to implement two customised global equity portfolios based on the firm’s Resource Efficient Core Equity Strategy in a £455m mandate.
Andrew Williams, chair of Hertfordshire’s pension committee, said: “The Hertfordshire Pension Fund is happy to partner with Osmosis Investment Management by investing in their Resource Efficient Core Equity Strategy.”
He added that the scheme’s committee, as part of its evolving approach to responsible investment, has agreed to a challenging transition path line to become net zero by 2050, where the fund will look to target investment in strategies that address risks such as climate risk and the efficient use of natural resources.
He said: “This investment with Osmosis is a clear demonstration of the fund’s commitment to managing these risks and responsible investment generally.”
Ben Dear, chief executive officer at Osmosis, added: “We are delighted that the Hertfordshire Pension Fund has selected the Osmosis Resource Efficient Core Equity Strategy to further strengthen their climate ambitions.
“The pension fund shares our belief that the efficient use of finite natural resources is critical to the future health and wealth of our planet and that addressing these externality risks at a portfolio level can not only reduce these environmental risks but also, if the allocation of risk is managed utilising our factor of resource efficiency, contribute to long-term economic returns.”
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