September 7, 2021
Interest in sustainable investing is now expanding into fixed income. This paper assesses how measures of sustainability/ESG might be relevant for corporate bonds and analyzes how ESG measures can be incorporated into an investment process to achieve the joint object of maximizing risk-adjusted returns and a sustainability target.
Read moreSeptember 22, 2021
While expected returns on traditional assets are trending lower than their historical averages, the same is not true for the associated risks. Given this, setting investors’ expectations may be more important today than ever.
Read moreSeptember 22, 2021
In this video, AQR Head of Responsible Investment Christopher Palazzolo explains how incorporating short selling within low carbon portfolios can help investors better effect change at portfolio companies and meet ambitious carbon reduction targets.
Our Approach
Cliff's Perspectives
September 7, 2021
It would be an understatement to say there is confusion in the industry about the use of shorting in an ESG context. When it comes to calculating a portfolio’s ESG score, we have heard arguments ranging from "ignore the shorts” to “net them against longs,” and, my favorite as it’s creatively insane, “pretend the shorts are actually longs.” This note explains why it is critical that shorts be properly accounted for, so that investors can use shorting to reduce carbon exposure, to get to net zero or to achieve other ESG goals.
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