Jason Mitchell, co-head of responsible investment at Man Group
Could short-selling by hedge funds of carbon-polluters help save the planet?
Despite being likened by critics every now and then to greedy nihilists responsible for multiple episodes of market volatility, short-sellers who bet on falling prices can play a role in moving the world towards net zero carbon emissions.
But one particular suggestion being made by some in the hedge fund world should be treated with scepticism.
The argument that has been made is that investors should be able to net out their “long” holdings in higher carbon-emitting companies with short positions in such businesses to reduce the estimate of the overall carbon footprint of their portfolios.
While there is some merit to this view, it risks conflating two very different approaches to assessing climate change within investment portfolios: known in jargon as “financial materiality” and “double materiality”.
The full article is available at https://www.ft.com/content/65ec280b-e9b0-40f3-9e6f-b0b65827aab6