• Gustavo Bernal Torres

Shorting Your Way to a Greener Tomorrow

From AQR Capital Management, their take on how proper treatment of shorting matters for the ultimate goal of responsible investing: to effect change.

  • Using short selling to reduce carbon exposure, to get to net zero or to achieve other ESG goals, is a vital tool for ESG investing. It’s also a tool that can readily be incorporated into portfolio construction. For those who want their investing to lead to a lower carbon (and better S and G) world, this is one important tool to help us get there.

  • When it comes to calculating a portfolio’s ESG score, we have heard arguments ranging from “ignore the shorts” to “net them against longs,” and, my favorite as it’s creatively insane, “pretend the shorts are actually longs.” To say there is confusion would be an understatement.

Source: https://www.aqr.com/Insights/Perspectives/Shorting-Your-Way-to-a-Greener-Tomorrow


Recent Posts

See All

A green-finance boom has not been followed by bust. This year’s greenwashing scandals, and investors’ relaxed attitude towards them, have demonstrated an important truth: that there is money to be mad

Evidence from Environmental Integration and Sin Stock Exclusion. This paper shows how sustainable investing—through the joint practice of exclusionary screening and environmental, social, and governan