Al Gore-Chaired Generation Investment Management Launches New Climate Fund Backed by Heavy Hitters

October 29, 2021

By Lynda Kiernan-Stone, Global AgInvesting Media

London and San Francisco-based Generation Investment Management, chaired by former Vice President Al Gore, was launched 17 years ago in 2004, at the very dawning of sustainable investment when few believed that financial returns could co-exist with a value-driven mandate. 

At its inception, Generation Investment was launched with a singular goal, explained David Blood, senior partner, Generation Investment, and chairman of the new climate fund. 

“…We launched Generation with a singular mission: to deliver strong, risk-adjusted investment performance by taking a long-term view and integrating sustainability and environmental, social and governance (ESG) research into our decision making. Quite simply, we wanted to prove that sustainable investing was in fact, the most sensible way to invest.”

Today, the rise of ESG investment integration and adoption of sustainability benchmarks and quantification into investment portfolios is no longer a novel, or scoffed-at, practice.

“The growth in sustainable investing is undoubtedly a positive development for the financial services industry, business and society at large,” said Blood.

Now, just days before the COP26 global climate conference, Generation Investment Management announced the launch of Just Climate – a new fund backed by Microsoft’s Climate Innovation Fund, the IMAS Foundation, Harvard endowment manager, Harvard Management Company, Hall Capital Partners, Imprint Group – an impact investment unit of Goldman Sachs Asset Management, and the Ireland Strategic Investment Fund (IRIF).

Lucas Joppa, chief environmental officer, Microsoft, commented, “If the world is to successfully address the climate crisis, we need to build the supporting financial infrastructure to accelerate a net zero economy. Through a combination of capital, a climate-led strategy, and both private and public sector partnerships, Just Climate aims to help enable a greater diversity of climate solutions while accelerating the development of markets that support those solutions’ procurement. Through this partnership, we look forward to helping grow areas of work that will aid in the global need to decarbonise and act as powerful assets in the fight against climate change.”

The size of the new fund was not disclosed, however, it is known that Generation Investment Management had approximately $36 billion in AUM as of June 2021

In order to cap global warming to 1.5 degrees Celsius, we would need to cut global greenhouse gas emissions by half within nine years. (A report just issued by the UN details how plans by global governments for emissions reductions are falling short and without greater action, global temperatures could catastrophically rise by 2.7 degrees Celsius by the end of the century.) Furthermore, the United Nations postulates that there is a funding need of $3 billion per year through 2050 to achieve net zero emissions.

Just Climate will be a vehicle through which to create climate impact at scale through investments in “catalytic” solutions in the food, agriculture, oceans, transportation, and energy industries.

Al Gore, chairman of Generation Investment Management, who will also chair Just Climate’s Climate Impact Advisory Group, said, “The sustainable investment industry has grown rapidly in recent years, a welcome development that gives the world a better chance of creating a net zero, prosperous, equitable, healthy and safe society. However, the climate crisis now demands an increase in the speed and scale of our collective actions by accelerating our current efforts and at the same time innovating new climate financing models. As a sector, we urgently need to seriously rethink how capital is allocated in order to deliver real progress toward the net zero commitments we have made. Just Climate aims to prioritise impact, to challenge conventional thinking and to inspire the sort of innovations that are now required for us to overcome the climate challenges ahead of us.”

Given the urgency with which the world needs to act, Just Climate was founded to address the most difficult challenges of decarbonization, noting that solutions must “now go broader and deeper” into segments of the global economy that investors have ignored until now.

“We are all too aware therefore of the scale of the challenge ahead of us and the speed required to address it,” said Blood. “That will mean rapid and profound transformation for every industry, not least sustainable investment, which must now evolve at speed to meet the challenges head on. It is as true of investment as it is for every other sector that business as usual will simply not deliver within the timeframe or with the scale required.”

Throughout its investment process, Just Climate will integrate transition considerations, including the need to ensure that the benefits of a transition to greener economies are widely shared. This intention will manifest in several dimensions:

~ Respect for human rights.
~ Preservation of land ownership and local resources.
~ Impact on local pollution and health.
~ Provision of fair jobs and livelihoods.
~ Contribution to quality of life and opportunities.
~ Equitable distributional outcomes.
~ Preservation of cultures and traditions.
~ Community self-determination and political voice.
~ And capacity for climate adaptation.

“Just Climate is a platform that can play a critical role in financing those typically asset heavy parts of the climate transition. Backed by the operational and research capability of Generation, we are building a global, institutional strength business to enable large scale capital deployment,” said Shaun Kingsbury, CBE, chief investment officer, Just Climate. “We hope our strategies will be differentiated by the magnitude, timeliness, and quality of impact they generate and by the returns we aim to produce. Since its launch in 2004, Generation has played a significant role in the development of the sustainable investment industry which I have admired from afar. I am therefore delighted to be playing a part in this latest initiative which we hope will play a similarly pioneering role in the establishment of climate transition investing as an asset class in its own right.”

 

– Lynda Kiernan-Stone is editor with GAI Media, and is managing editor and daily contributor for Global AgInvesting’s AgInvesting Weekly News and  Agtech Intel News, as well as HighQuest Group’s Oilseed & Grain NewsShe can be reached at lkiernan-stone@globalaginvesting.com

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