Green investing goes mainstream
Al Gore
In a presentation to financial services media yesterday, former United States vice president Al Gore said sustainable investing enables financial services professionals and their clients to help tackle major global environmental, social and corporate governance (ESG) issues, while generating superior long-term returns.
Gore and business partner David Blood, who together formed global sustainable investment company Generation, flew into Sydney yesterday for the official launch of their new sustainability fund, available to Australian retail investors via Colonial First State ’s FirstChoice platform.
Gore, Blood (a former chief executive of Goldman Sachs Asset Management) and Colonial chief executive Brian Bissaker said sustainable investing wasn’t just a “feel-good exercise”, but rather a sophisticated investment strategy for generating positive, long-term returns. It is based on the premise that companies that understand and successfully manage ESG issues are likely to perform well financially over the long-term.
Bissaker said the Generation Global Sustainability Fund would suit both “mainstream” investors seeking exposure to global equities as well as those who wish to invest in companies that are, for example, minimising their negative effects on the environment, providing sustainable solutions to environmental problems (such as renewable energy and water conservation) and widespread health problems such as AIDS/HIV and diabetes. Companies that treat staff and customers well and are involved in philanthropic pursuits are also considered sustainable.
Gore, Blood and Bissaker were also keen to emphasise that sustainable investing differs from ethical and responsible investing in that it does not attempt to reflect individual investors’ values.
“We’re not about trading values for values,” Blood explained.
“We are a traditional, mainstream investment team who integrate sustainability research into our evaluation of companies to maximise returns for investors. About 60 to 80 per cent of a business’ value is in its long-term values [that is, how it manages ESG issues].
Gore said that sustainable investment techniques were moving into the mainstream.
“The world faces significant sustainability challenges and so these kinds of investment techniques are becoming increasingly important.”
Although, sustainable investing doesn’t reflect investors’ individual ethical concerns, Gore said there are opportunities for them to engage with the companies in their portfolio, actively encouraging them to improve their understanding and management of ESG issues.
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