MFA Submits Comments to IIGCC on Incorporation of Hedge Funds in the Net Zero Investment Framework

On June 17, 2022, MFA submitted comments to the Institutional Investors Group on Climate Change (IIGCC) discussion paper on incorporating derivatives and hedge funds into the net zero investment framework. The response supports the IIGCC’s efforts, highlighting alternative asset managers utilize a broad range of investment strategies, and many of them take into account climate risk or have specific products with climate-related objectives. MFA also agrees with the IIGCC’s assessment that the use of derivatives and shorting strategies increases the range of opportunities that investors can utilize to exert constructive influence and to achieve their net zero ambitions.

However, MFA expresses significant concerns that the proposed framework does not adequately nor consistently consider the ability for investment tools which contribute to reallocation of capital to influence the transition towards net zero. In particular, MFA notes the significant body of academic research showing short selling influences pricing and can impact real economy outcomes.