“I’m a recuperating politician,” says former vice president Al Gore, deftly declining to opine on why his Democratic Party fared so poorly in last month’s elections. “Right now I’m on about step nine, and you’re putting me in danger of a relapse.”
What Gore will talk plenty about these days is investing. Last month the 56-year-old Tennessean started a new asset management firm, Generation Investment Management, along with former Goldman Sachs Asset Management CEO David Blood and a handful of other ex-GSAM execs. As chairman of the London-based private partnership, Gore will focus on integrating environmental sustainability research into Generation’s investment-selection process. The ex-veep, whose 1992 book, Earth in the Balance, urged big companies and citizens alike to pay greater heed to the health of the environment, will devote about one quarter of his time to the new firm.
Generation will pursue a different approach from that of other environmentally and socially conscious money managers. In identifying large-cap stocks to buy and hold for several years, the firm won’t ban companies or industries that give sustainability concerns short shrift. Instead, Generation will consider environmental policies, community involvement and social responsibility as important fundamentals that affect equity values, alongside such purely financial measures as price-earnings multiples and growth forecasts. The firm also will donate 5 percent of any profits to a foundation it has started to promote sustainability research.
For now the partners are managing their own money, but in February they will begin raising additional funds from institutional investors. The firm will charge a standard flat management fee but will couple that levy with an incentive fee based on Generation’s three-year rolling performance. “We’re organizing the firm for the long term, and we want our interests to be the same as our clients’,” says Blood, who will serve as CEO.
The new firm’s founders say its name has a double meaning, signifying both the generation of returns and the future generations who will benefit from sustainability. But Gore, who hasn’t lost his sense of humor since coming within a few hanging chads of the presidency four years ago, had another idea: “I tried to convince David that ‘Blood & Gore’ would be the best name. But the best reaction I could get to that from the others was, ‘You’re kidding, right?’”
