About episode
Hedge funds aren’t exactly known for contributing to climate progress or other ESG goals for that matter. So I was surprised to learn about Corbin Capital, a firm that aims to leverage the activist strategies of hedge funds not just to generate market-exceeding returns for their clients, but to advance environmental and social objectives.
There are trillions of dollars invested in hedge funds that can make a difference in this all-hands-on-deck moment. So why not think about how hedge fund tools can help accelerate decarbonization and other environmental priorities?
To learn more about this opportunity and how Corbin Capital is pursuing it, I sat down with their Director of Sustainability Courtney Birnbaum. I learned a lot about hedge fund tactics, and the opportunity to invest in transition commodities, carbon markets, and more. Lots to learn through this one – enjoy!
In today’s episode, we cover:
- [2:47] Courtney’s path to working on climate & sustainability
- [4:37] Corbin Capital & Courtney’s role there
- [7:59] What is a hedge fund & how is it different than other investment vehicles
- [9:23] The history of hedge funds & factors that have made them successful
- [11:27] Why today is a good moment for hedge fund investing
- [13:18] Uncertainty creating opportunities for hedge fund investing
- [15:31] Influencing transformational change through hedge funds
- [17:52] Examples of success stories
- [20:29] Thinking about criticisms around lack of transparency
- [22:13] What makes Corbin unique
- [23:19] Climate opportunities for Corbin investors & the impact they’re aiming to have
- [25:59] Litigation finance
- [27:23] How hedge funds can play a role in decarbonization
- [28:16] How hedge funds can play a role in the carbon markets & carbon credits
- [30:28] Short selling as a strategy for improving corporate sustainability
- [33:57] How do finance needs to change to better tackle today’s climate crisis
Corbin Capital & Courtney’s role there
Corbin Capital as a $9 billion women-led alternative investment firm specializing in multi-strategy hedge fund and opportunistic credit investing. They create and manage both commingled and customized portfolios for global clients, leveraging their unique position as both an allocator and investor to capture distinctive deal flow. Corbin’s management team has been in place for over 20 years, with a history dating back to 1986. They implement their investment strategies through manager partners, direct hedge fund investments, private credit managers, customized accounts, direct investing, and co-investments.
Courtney’s role at Corbin aligns with the firm’s sustainability journey, which began under the leadership of CEO Tracy McHale Stewart around 2018. Recognizing the lag in ESG integration within the hedge fund and private credit space, Corbin adopted a research-driven approach, hiring academic professors and consultants, including Courtney. She helped develop an ESG integration framework and now works with managers to evaluate and enhance their ESG policies, ensuring robust implementation. Additionally, Courtney manages a sustainability impact-oriented strategy diversified across themes and asset classes, integrating within the investment team to identify impactful investments with strong risk-adjusted returns. She also utilizes technology tools to monitor transparency and impact in the space.
What is a hedge fund & how is it different than other investment vehicles
Courtney explains that a hedge fund is more accurately described as an investment structure rather than a separate asset class. It is a pooled investment fund with flexible mandates, allowing it to invest in various asset classes without being constrained by benchmark indices, unlike long-only equity managers. Hedge funds can invest in credit, equities, interest rates, commodities, and use leverage, options, and futures. They range from simple, long-biased equity managers to those employing complex derivatives and risk management tools. The primary goal of a hedge fund is to generate strong risk-adjusted returns and minimize correlation with market indices, often using traditional tools like engagement and activism, especially useful during times of transformational change, such as within sustainability.
Climate opportunities for Corbin investors & the impact they’re aiming to have
Courtney highlights that the impact of investments can vary, but Corbin Capital focuses a portion of their assets on sustainability to maximize impact. They measure this impact through both internal diligence and an external third-party database, aligning their investments with various UN SDGs. One notable area of focus is litigation finance, where Corbin has significant experience. An example is their co-investment in the Dieselgate case and the Marina Dam disaster.
In the Dieselgate case, Corbin supports litigation against 14 automobile manufacturers for deceiving consumers about their environmental impact, with a potential $1.7 billion settlement involving 957,000 claimants in the UK. This “David versus Goliath” approach empowers individuals to hold corporations accountable, aiming to deter future corporate deception by imposing substantial fines and promoting sustainable practices. Similarly, the Marina Dam disaster involves litigation over severe environmental and social impacts due to toxic waste release, causing property damage, deaths, and injuries. By holding corporations accountable, Corbin aims to deter future irresponsibility and support climate targets through these impactful investments.
Resources Mentioned
Connect with Courtney Birnbaum
- Connect with Courtney on LinkedIn
Connect with Jason Rissman
Keep up with Invested In Climate
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