Fossil fuel divestment has gained traction in recent years, as investors seek to align their portfolios with sustainability goals and mitigate climate risks. Fossil fuels have historically provided stable returns and dividends, so divesting could lead to concerns about short-term financial performance.

Excluding whole sectors of the economy is not a straightforward decision, however, and there are many challenges and risks to consider. How should one define fossil fuels? How does one address the demand for fossil fuels as well as the supply? What are the alternatives to fossil fuel stocks?

Ensuring divestment does not unintentionally leave portfolios under-diversified or exposed to unintended risks requires a nuanced approach. Osmosis Investment Management believe that careful planning, clear investment criteria and robust reinvestment strategies can help investors transition toward fossil-free portfolios without compromising financial performance. In this short video, the company take a deeper look at the ways in which they can navigate, or better still mitigate, some of these concerns.

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