Our Managing Director, Tyson Roberts, recently had the privilege of attending a forum featuring two distinguished speakers, former U.S. Vice President Al Gore and his co-founder at Generation Investment Management, David Blood. The dialogue was a deep dive into the world of responsible investing, the imperative for government and finance sector collaboration, and pioneering climate-focused investment strategies.

Global Politics: A Catalyst for Climate Action

The conversation kicked off with an insightful overview of global politics, a pivotal factor in achieving the 2050 climate goals. With 40% of the global adult populace slated to vote this year, the potential for significant policy shifts is substantial. Gore spoke about the growing indirect interest in sustainable investments among traditional U.S. ‘red states’, attributed to the construction of electric car manufacturing and battery building plants within their states creating investment and jobs.

The Climate Crisis: A Call to Action

The forthcoming five years are deemed critical to limit the global temperature rise to 1.5% or less. The speakers drew attention to the escalating frequency of disasters, such as the recent state of emergency in California, the incineration of over 400 million acres in Canada last year, and Northern Australia’s record-breaking rainfall. They cautioned that these events will proliferate if emissions persist at the current rate and noted the hottest ten years on the planet are the last ten!

Developing Nations: The Key to Climate Goals

Developing nations were recognised as crucial contributors to achieving climate goals. Gore, a member of the World Economic Forum, suggested that the World Bank needs to enhance its efforts, citing the high borrowing costs for constructing solar or wind farms in Nigeria compared to Australia, with interest rates approximately seven times higher in the developing nation.

Public and Private Markets: The Engines of Sustainable Investing

Blood examined the role of public and private markets in sustainable investing, noting that 80% of investment into sustainable markets originates from investors, not governments. He stressed the necessity for ongoing investment and policy reform and although they have achieved significant milestones the past twenty years, if the current run-rate continues the world will fall well short of the 2050 objectives. It was noted that Gore believes we will achieve the goal, however it will take a concentrated effort from leaders in local communities, governments and capital investors to achieve this.

Risk, Return, and Impact: The New Investment Paradigm

Traditional investment has been predicated on risk and return, but Blood introduced a new concept: Impact. He posited that investors will increasingly contemplate the impact of their investments, seeking sustainable options that yield substantial returns and effect meaningful change. For the record their flagship fund, the Generation Wholesale Global Share Fund, has returned investors 8.01% p.a. over the past three years (falling short of the benchmark return of 13.62%) and an impressive 14.09% p.a. over the past ten years (exceeding the benchmark at 12.31%) as of January 31, 2024.

The U.S. Deficit: A Call for Transformational Change

The speakers also broached the subject of the U.S. deficit, currently standing at $1.7 trillion, labelling it as unsustainable. They emphasized the need for transformational, not incremental, change. The allocation of capital to bolster sustainable initiatives was identified as a key challenge, particularly in channelling capital to the developing world.

The event concluded on an optimistic note: “We have everything we need to do what is needed.” The pace of progress, they suggested, hinges on the allocation of capital and the willingness of politicians to implement necessary changes, even at the risk of their re-election.

As Gore and Blood’s fund prepares to commemorate its 20-year anniversary in London next month, their message is unequivocal: the time for responsible investing and policy change is now.