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The 2016 Hedge Fund Rising Stars: Ian Monroe
At Etho Capital, co-founder Monroe is bringing ESG to hedge funds by shrinking portfolios’ carbon footprints.
Bringing the battle against greenhouse gas emissions to investors, Ian Monroe, 35, is a breath of clean air for the hedge fund industry. The co–founding president and chief sustainability officer of Etho Capital, a sustainable-investment firm launched last June, has developed a new method for screening companies based on environmental, social and governance (ESG) principles that will form the basis for a hedge fund to be opened later this year.
San Francisco–based Monroe, who holds bachelor’s and master’s degrees in Earth systems from Stanford University, where he teaches courses on sustainability, has dedicated his life to finding solutions to climate change. After finishing his master’s in 2004, he worked as a climate consultant on energy and development projects in more than two dozen countries across Africa, Asia, the Americas and Europe with such institutions as the United Nations, the U.S. State Department and the World Bank Group. Monroe thought direct engagement with the public was lacking, so in 2012 he helped to create a gamelike online service called Oroeco that lets people compete with each other to reduce their carbon footprints. That year the Redwood Valley, California, native also began collecting and analyzing data on companies’ greenhouse gas emissions to estimate the amount of pollution associated with Oroeco users’ investment portfolios.
In 2014, Monroe, who still serves as CEO of Oroeco, started Etho Capital with Conor Platt, founder and CIO of Pittsburgh-headquartered hedge fund firm Confluence Capital Management, to bring mathematical rigor to sustainable investing. Last October, drawing on Platt’s investment know-how and Monroe’s models and data, the pair launched the Etho Climate Leadership Index, which tries to identify the most carbon-efficient companies in every industry; the next month they opened an exchange-traded fund that tracks the index. Etho’s hedge fund, which will target 10 to 15 percent annual returns, plans to take long positions in climate leaders while short-selling industry laggards to create an essentially carbon-free portfolio.
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