MSCI Inc has questioned the hedge fund industry’s assertion that short-selling is an effective strategy to implement environmental, social and governance investing, according to a report by Bloomberg.
Rumi Mahmood, vice president of ESG and climate fund research at MSCI is quoted as saying that there is no evidence to support the claim that shorting a company with a poor ESG record will raise it’s cost of capital and that, in fact, short-selling goes against the grain when attempting to align investor interests with good corporate conduct due to a lack of transparency.
Mahmood said that due to “enhanced scrutiny on any and all ESG claims,” fund managers “will have to be more thoughtful” ensure that they can “back things up in an evidence-based manner.”
