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

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

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

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.

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