The big (green) short: How hedge funds profit off greenwashing

Green Graft: Hedge funds are shorting companies with weak environmental credentials.

December 19, 2019

ESG — the acronym for Environmental, Social and Governance — is an increasingly popular method of judging the ethics and sustainability of business practices.

But in a practice known as “greenwashing,” many businesses claim ESG compliance for a quick PR win without actually improving ethics or sustainability — and hedge funds are trying to profit off exposing them

Investors have poured some $31 trillion into so-called sustainable investments, Reuters says.

Traditional investors trust reports showing that strong ESG companies outperform the market. But hedge funds are seeing inflated asset prices because of greenwashing.

And they have plans to short sell the companies that falsely claim ESG credentials — by placing their biggest bets on companies with the highest ESG scores.

Now, the SEC is getting involved.

  • SEC Commissioner Hester Peirce has criticized ESG standards, saying they “rely on research that is far from settled.”
  • In perhaps the greatest burn in SEC history, Peirce said ESG could mean “Enabling Stakeholder Graft” ( drop). 

Join 1.5m+ professionals getting The Hustle daily news brief

Business and tech news in 5 minutes or less

100% free, no ads or spam, unsubscribe anytime


How'd Bezos build a billion dollar empire?

In 1994, Jeff Bezos discovered a shocking stat: Internet usage grew 2,300% per year.

Data shows where markets are headed.

And that’s why we built Trends — to show you up-and-coming market opportunities about to explode. Interested?

Join us, it's free.

Look, you came to this site because you saw something cool. But here’s the deal. This site is actually a daily email that covers the important news in business, tech, and culture.

So, if you like what you’re reading, give the email a try.

If you don’t like it, unsubscribe any time. Privacy policy.