Talking 'bout their generation
Al Gore serves as chairman of Generation Investment Management, but running day-to-day operations falls to Goldman veteran David Blood.
Fortune Magazine -- Four years ago David Blood retired as CEO of Goldman Sachs Asset Management. Having seen extreme poverty as a child in Brazil, where his father was an auto executive, Blood was looking for a second act that was about more than making money. He and Al Gore started Generation Investment Management with a lofty goal; "To encourage businesses around the world to be more responsible, ethical, and sustainable."
Based in London, Generation combines traditional securities analysis with thematic research into issues such as climate change, water, global poverty, and HIV/AIDS. "Sustainability, defined as environment, social, governance, and ethics, matters to business," Blood says. "It's not only about risk management or cost, but about revenue, profit, and competitive positioning."
The firm invests in about 30 to 50 companies, with a bias toward the long term. Although its holdings, at first glance, appear unremarkable, Mark Ferguson, another Goldman (Charts, Fortune 500) alum who is chief investment officer, explains that companies are selected not just for the quality of their business and management, but because they understand the importance of social, environmental, or workplace issues.
U.S. auto parts supplier Johnson Controls (Charts, Fortune 500), for example, has a great battery business as well as a line of energy-efficiency products, Ferguson says. Danish drugmaker Novo Nordisk (Charts) sells an inexpensive insulin drug and rewards its salespeople for lowering patient blood-sugar level, not for selling more drugs. Other Generation holdings have included AFLAC, General Electric (Charts, Fortune 500), and Whole Foods Market (Charts, Fortune 500), according to SEC filings.
The firm currently manages about $1 billion from institutional investors, including CalSTRS and several European pension funds. Generation doesn't release performance data, but investors say the portfolio has outpaced its benchmark, the MSCI World Index, particularly during the past few months of market jitters.
For a small company, it has a high-wattage advisory board, which meets twice a year to hash out big ideas. That group includes Mary Robinson, the former President of Ireland and UN High Commissioner for Human Rights; MIT professor Mario Molina; Jonathan Lash, president of the World Resources Institute; and technology executive turned social activist Mitch Kapor. And, of course, the group's newest member, John Doerr.