The ESG Hustle

ESG (environmental, social and governance) investing is all the rage. But Carson Block is targeting ESG companies to sell short. “When we first started shorting companies that were deemed to be ESG, we didn’t have this theme in mind that ESG is the space for grifters,” Block told Bloomberg. Block has re-thought his view and sees that ESG firms “had attracted ‘some of the most aggressive managements and companies in the space,’ motivated by government subsidies.”

Block is the founder of Muddy Waters LLC. His firm is shorting solar firm Sunrun, Inc. (for the second time)  as a part of a short theme he calls the “ESG hustle.” When he released his first report on Sunrun, in July 2022, he included in the title that ESG stands for “Everybody Screws the Government.”

While Block has a target painted on ESG companies, 86% of college endowments have “investment policies [that] include a commitment to environmental, social and governance (ESG) principles in their policies”—up from about 80 percent the year before, according to the National Association of College and University Business Officers.

This being the case, politicians are attempting to make ESG a political issue. “Anti-ESG Republicans fundamentally view ESG as an incursion of progressive politics into marketplace decision-making,” Joshua Nunziato, who teaches sustainability and other topics in the Leeds School of Business at the University of Colorado told insidehighered.com. 

Witold Henisz, vice dean and faculty director of the ESG Initiative at the Wharton School at the University of Pennsylvania  claims politicians are simply protecting fossil fuels and other industries that are aligned with and donate to the Republican Party. 

Many high-brow universities have already said “NO” to fossil fuel investments. In 2021 Yale University announced that its Board of Trustees approved a set of ethical investing guidelines for the university’s multibillion-dollar endowment. That same year Rutgers University announced that it would divest from fossil fuels, following in the footsteps of institutions including American University, Brown University, Columbia University, Georgetown University, Middlebury College, the University of Southern California and the University of Cambridge. 

“Should anti-ESG pushback start hinting at endowments, we wouldn’t be surprised to see students uprising and demanding they be heard. After all, in recent times we have seen that they are not afraid to ask for what they believe they are entitled to: a livable planet to inhabit in the future,” Paul Herman, founder and CEO of Hip Investor, who has devised a rating system for colleges to gauge investments based on how well companies address ESG,  told insidehighered’s Josh Moody.

Oh brother. Mr. Block may wish he could short university endowments.