Financial Times has published an interview with Al Gore, stating that “sustainability is history’s biggest investment opportunity”. That’s quite a bold but much needed statement, compared to traditional investment.
Delivering fast results has a long history of being rewarded. Bringing money to the table quickly has been more important than how the money was made. Short term results are still a highly sought after goal regardless of business sector. Yet this strategy is part of the old domain, according to Gore. What brings the former Vice President and environmental activist to this conclusion?
It might be because his sustainability-focused fund management company is going so well. It was co-funded 14 years ago with David Blood, former head of Goldman Sacs Asset management. Named Generation Investment Management, its flagship equity fund has produced 13, 5 per cent annual returns compared with the benchmark of 7,3. With such a strong wind in its sails, the flagship really lives up to its company name.
Investing in sustainable companies is the key ingredient here. These establishments are defined by Gore and his company as “one whose earnings do not borrow from future earnings, whose revenues are driven by sustainable practices, and whose products or services are low carbon and have health or societal benefits”.
At the same time as providing these strong numbers, companies listed on the stock exchange report low levels of sustainability. The reason might be because board members demand quick return on investments that does more harm than good on its way. As Mr. Gore puts it: “everybody knows that the market is a wild and unruly beast, and you have to do the best you can”. The game changer is that if you focus on long-term, non-invasive investments, you do not have to play by the same, dirty rules. This is ultimately what Gore defines as the single largest investment opportunity in history. And why should we get on board? Because rumor has it that it has the magnitude of the industrial revolution on the one hand, and the speed of the digital revolution on the other. If you’re not already on board, the thought itself is worth being heavily invested in.