- Former Vice President Al Gore has been working on a sustainable investment firm since 2004.
- The Trump administration has been working to unravel landmark environmental moves put in place under the Obama years.
- Gore and his business partner, David Blood, former head of Goldman Sachs Asset Management, say their investment approach is unaffected by public policy.
- “The train has left the station,” Gore said.
Since leaving political office, former Vice President Al Gore has been working on, among other things, an investment firm that focuses on sustainable investing.
He teamed up with the former head of Goldman Sachs Asset Management and others in 2004 to launch London-based Generation Investment Management.
The $US18 billion firm chooses companies it thinks will be successful in the long term. Among the requirements: the companies must provide products or services that have a low-carbon footprint, and in Generation’s words, lead to a “prosperous, equitable, healthy and safe society.”
We recently caught up with Gore and his business partner, David Blood, the former Goldman exec, to talk about the firm’s approach, and what, if anything, has changed since President Trump was elected last year.
The Trump administration, under new Environmental Protection Agency head Scott Pruitt, has vowed to kill Obama’s centrepiece climate-change action, the Clean Power Plan, which was to reduce carbon-dioxide emissions. The president also vowed to remove the United States from the landmark Paris climate agreement.
But by and large, policy doesn’t affect Generation’s investments — nor has it affected the pace at which sustainable companies are looking to innovate, Gore and Blood said.
You can read the relevant excerpt from our interview below:
Levy: Since President Trump was elected in November of last year, he’s had a few different roll outs that environmental activists haven’t been happy about. I wonder if, in any way, this current administration has changed the way Generation views its investment strategy?
Gore: I think that it has affected our strategy far less than anybody might have worried at the time they took over. I think that first of all, we don’t really base investments on the anticipation of policy in any case. At times, it’s of course material. But again, the trends in the marketplace are so powerful and have so much momentum now. You know, the cost curves and renewable energy and batteries and electric vehicles and more important, the thousands of new efficiency improvements that are sweeping through the economy, they’re almost independent of policy. It’s not that policy doesn’t matter, of course it does, but just to take the Paris agreement as an example. The first step on which the US could legally withdraw anyway is the first day after the next presidential election. Other governments around the world said we’re still with Paris. California, New York, lots of other states, hundreds of cities, thousands of CEOs, have all said, ‘Look, this train has left the station. We’re still on it. We got this.’ The economy is undergoing this massive shift and it’s hardening in a way, but our first job again is to get the best returns for our investors by integrating these trends and our analyses — we’re deeply focused on research — into the investment decisions.
Blood: I would add … we have never been investing based on regulation or public policy or what we expect public policy to be. Like Al said, it matters and is certainly an important backdrop, but our fundamental investing strategy is to actually not forget the core fundamentals of finance, the core fundamentals of business. What you see if you keep that focus, what you would see is that the technology change — the number of really interesting business models — that have emerged over the last five years to address the transition to a low carbon economy, have been just spectacular. The cost curve on solar, as an example, exceeds expectations, and we expect it will continue to do so. I guess what I’m trying to say to you is the train has left the station. The number of businesses that are driving towards a sustainable, low carbon economy, it’s really absolutely mainstream now. That doesn’t mean all businesses will be successful, that have taken that mantra, but it gives us an opportunity or choice to deploy capital in a way that is very exciting. It’s unfortunate, the decision of the President, but as Al said, we’re still in the Paris accord and it turns out there are others who are American who believe passionately that this is in our economic interests. That’s another thing I want to come back to. We’re passionate. We’re about mission at Generation, but we see mission and the economy and really what’s driving long term growth as one in the same. In this particular instance, it’s one and the same.