Investing in the environment: Some thoughts on the new breed of green hedge funds

Abstract

Hedge funds have now begun to expand into the field of ethical or socially responsible investment. Among the latest entrants into that field are green or environmental hedge funds that seek absolute returns from environmentally oriented investment strategies. This paper examines the legal structure of these new environmental hedge funds and the implications for them of the prudent investor rule. An analysis of that rule discloses that care must be taken in designing security screens and selecting investments for environmental hedge funds to address the potential tension between the financial criteria for investment stipulated by the prudent investor rule and the non-financial environmental objectives or philosophy of the fund.Derivatives Use, Trading & Regulation (2007) 12, 351–357. doi:10.1057/palgrave.dutr.1850055 [ABSTRACT FROM AUTHOR]