Osmosis takes ‘resource efficiency’ investment approach to the US

US investors are set to benefit from an investment approach that assesses resource efficiency, as UK-based Osmosis Investment Management delivers its Model of Resource Efficiency (MoRE) strategy across the pond.

Osmosis says MoRE utilises unique and distinguishable insights to indentify values in well-run global businesses. It argues that markets have always valued the characteristics that accompany sustainable behaviours.

The firm has now teamed up with US-based Calvert Investments, which specialises in using sustainability to create value for investors.

The investment strategy identifies high quality, well-managed large cap global businesses that demonstrate greater levels of resources efficiency than their peers. The method evaluates companies on the amount of energy consumed, water used and waste created relative to revenue and takes a “best-of-breed” approach, excluding finance and tobacco.

Resource scarcity is increasingly becoming a problem and affects many of the world’s commodities, from oil to food and water, and climate change is damaging supply and demand in some cases.

For example, by 2050 more than half of the global population is expected to live in ‘water-stressed areas’ and climate targets mean there are a growing number of people and organisations calling for oil to be left in the ground.

Saad Rashid, investment director of Osmosis Investment Management, said, “We live in a resource-constrained world. Companies that create greater value from resource inputs generate better shareholder returns. Those that are more efficient at transforming resources into revenue tend to display characteristics and behaviours that promote innovations, investment and adaption.”

By considering resource efficiency and other sustainability issues, investors can create a double bottom line where they ensure they do as little damage to the environment and communities as possible whilst still achieving healthy returns.

This sentiment is something that Lynne Ford, executive vice-president of Calvert Investment Distributors, echoed. She said that for the last 30 years, the firm has “demonstrated that by using the lens of sustainability, we can create value for investors”.

By delivering MoRE in the US the firms aim to help meet the growing demand from North American investors, particularly institutional investors, to align their investment strategies with their values.

Jeremy Grantham, chief investment strategist at GMO, has previously spoken about resource scarcity and investment. In an interview with Ben Goldsmith, head of sales and marketing and a partner at WHEB, he said one of the organisation’s reports showed that we are “clearly entering a new era of scarce resources”.

Further reading:

Jeremy Grantham on investing, resource scarcity and climate change

Resource efficient food in a changing, growing world

World wasting up to half of global food

Impax Asset Management on investing in resource efficiency markets

52% of global population to live in ‘water-stressed areas’ by 2050