Green Commodities and Climate Impact

As ESG considerations have begun to extend outside of public equities portfolios, a new wave of confusion and debate has arisen – how does the industry translate ESG categories that evolved in
public markets to hedge funds, where it is possible to go both long and short? The fundamental question at play is: How can hedge funds maximize the ESG impact of their investors’ funds?

This question is still very much up for debate, with the majority of hedge funds just beginning to consider or implement ESG into their investment processes.

While this debate extends to a variety of securities and ESG factors, we will focus on our area of expertise – climate impact in commodities portfolios – where there are three basic schools of thought:

  1. Long-green; short-“dirty”
  2. Long-only
  3. Long-short with a green-filtered portfolio

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