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MFA report showcases short selling as an effective tool to achieve ESG goals

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The Managed Funds Association, an association for the alternative asset management industry, has released a research report showcasing the important role short selling can play in advancing ESG goals.

The report, “The Use of Short Selling to Achieve ESG Goals,” was produced in conjunction with Copenhagen Economics.
 
The paper quantifies how short selling can contribute to increasing the cost of capital for high-emissions public companies and can serve as a tool to incentivise corporate management to take more sustainable approaches. It also demonstrates how short selling can be an effective tool to hedge against the portfolio risks associated with the climate transition. For short selling to realise its full potential, the report argues that ESG metrics should recognise that short selling has a different impact in a portfolio than long positions.

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