East Sussex Pension Fund, Lewes, England, hired Osmosis Investment Management to run a new £200 million ($271 million) global equity ex-fossil fuels portfolio, said Sian Kunert, head of pensions, in an email.
The £4.7 billion pension fund is the first U.K. local government pension scheme investment in the new Osmosis Resource Efficient Ex-Fossil Fuels strategy, according to a news release from Osmosis.
The passive strategy is advised by Osmosis, with UBS Asset Management acting as investment manager, the news release said.
The strategy uses a quantitative screening process to remove companies that generate more than 5% of their revenue from "nuclear energy, any company associated with nuclear weapons, controversial weapons, civilian firearms, tobacco, thermal coal, oil sands and businesses that are not compliant with the United Nations Global Compact principles," according to the new release.
Companies in the utilities sector that transition far enough to sustainable business models and wind up generating more than 50% of energy from renewable sources can be eligible for reintroduction.
Gerard Fox, chairman of the East Sussex Pension Committee, said in the news release the new strategy "is a great addition to a number of changes already in place as part of the fund's climate response implemented as a result of its statement of responsible investment principles. While keeping fees low for our members by retaining passive equities, and with the exposure to carbon, water and waste all being reduced, we feel this investment meets a number of key objectives for the fund."
It is the pension fund's second passive equity allocation to a fossil fuel-free portfolio. In 2020, the pension fund hired Storebrand Asset Management to run £400 million.