An Australian activist short-selling fund, Sunlight Partners, has scored its first major win by targeting Babcock & Wilcox (B&W), a 160-year-old boiler manufacturer that recently pivoted to providing emissions-intensive power for data centers. Sunlight’s May report alleged B&W’s proposed projects were unlikely to be built and its technology was inefficient and outdated, sending B&W’s stock down 13% in a week and over 50% since the report’s release, netting the fund a 12% return on its short position.
Sunlight’s approach marks a distinct shift in activist investing. Rather than buying stakes to push for reform, the Brisbane-based fund bets against companies it identifies as greenwashing, generating excessive waste, or committing other environmental sins — focusing on less diversified firms where a single line of business carries outsized weight. Co-founder Will Funnell, a former options trader, says the fund plans six to eight reports annually and is in talks for its first major institutional investment, targeting a $200 million scale. The strategy exploits a growing vulnerability: as capital floods into AI infrastructure, the environmental claims underpinning data center power deals face sharper scrutiny.
The B&W case underscores a tension at the heart of this model. Dartmouth professor Mark DesJardine notes that short-sellers need immediate market impact to profit, which may not align with the longer timeline required for genuine operational change. A fund can exit a position once the stock drops, achieving its financial goal before the target commits to reforms. Still, the market signal is unmistakable: companies making aggressive green claims to win data center contracts now face a new class of adversary armed with forensic research and financial leverage.
Read the full report at GreenBiz.