Alternative Investments/ESG: On The Eve Of COP26, Hedge Funds Ambivalent On ESG (Survey)

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A survey by Hedge Fund Research showed hedge fund managers remain evenly split over the incorporation of ESG factors into their investment processes.

The results of a poll of hedge fund managers conducted by Hedge Fund Research showed that 53% of them (687 managers) incorporated ESG factors and sustainability metrics into their investment processes. However, 47% (609 managers) said they did not do so. The results are significant, coming as they do ahead of the 2021 UN Climate Change Conference (COP26) in Glasgow this weekend. (HedgeWeek)

On the eve of COP26: Hedge funds slow to implement ESG

Another finding: Three-quarters of funds engaged with their portfolio companies on ESG issues, while 25 per cent did not.

However, an overwhelming 77% of funds factored in climate change in their investment processes, while 23% passed on this.

These findings resonate with those from a survey by advisory and accounting firm EisnerAmper that were released earlier this month.

That study found that only 17 per cent of hedge fund executives confirmed that their company had an ESG portfolio, a proportion that was unchanged from the 2020 survey.

Hedge funds’ seemingly slow response to ESG imperatives are significant in the context of the record inflows into hedge funds in 2021. According to the August eVestment Hedge Fund Asset Flows Report, the new money coupled with performance gains throughout the year brought the overall hedge fund business to a record USD3.622 trillion AUM as of end-August.

Hedge funds scoop up unloved energy assets that fall foul of ESG

An article by the Financial Times earlier this month said hedge funds had been making fat profits by picking up energy assets on the cheap after these were jettisoned by environmentally minded institutional investors.

The FT said hedge funds were under less pressure to conform to ESG norms compared to the big, mainline funds.

In many cases, hedge funds were the only buyers available for fossil fuel assets put on the block by these large investors.

As energy prices surge to multi-year highs, these funds are laughing their way to the bank.

Related Story: Nuveen Launches ESG Dividend ETF

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