A pdf version of our statement of sustainability can be viewed here [pdf].
We recognise that our activities have a direct and indirect impact upon a range of stakeholders, and consider these in three categories:
- First Order—Direct impact from our business activities, including how we look after our people, manage relationships with our external suppliers and minimise any negative impacts on the environment;
- Second Order—Impact resulting from the way in which we deploy capital on behalf of our clients into the investee companies that we select for our portfolios;
- Third Order—Impact that we have on the broader capital markets, environment and society through our individual and collective participation, advocacy work and philanthropy.
The following pages describe our objectives and actions with regards to managing our impact.
First Order Impacts: People and Operations
We are a team of investment management professionals with offices in London and New York.
To attract, retain and develop the best professionals we seek to provide our team members with the opportunity to:
- Interact with highly-skilled professionals in a positive workplace environment;
- Find personal fulfilment from succeeding, learning and developing in challenging roles, and
- Deliver meaningful results to our clients in a way that fulfils our Mission while maintaining our values and ensuring that our own interests are aligned with our clients.
Our Culture, Incentive Structures and Workplace Environment are three important contributors to achieving our objective.
Culture: Generation has developed a strong client-aligned, performance-driven, learning-oriented culture that encourages teamwork, excellence, creativity, diversity, fairness, professional development, openness and integrity. We are proud of our culture and we believe it will be a key driver to our long-term success. We have tried to be thoughtful and deliberate in its development and work hard to maintain and reinforce it.
Incentive Structures: Generation's incentive structures are designed to align our interests with those of our clients in the delivery of superior long-term investment performance.1 In addition to the remuneration component of our incentive structure, we provide a number of benefits aimed at looking after the health and well-being of team members and their families, now and into the future. Included in this are employer-pension contributions, health, travel and life insurance, health assessments, subsidised gym membership, flexible working arrangements and generous maternity/paternity provisions.
Workplace: We aim to create a productive, safe and healthy work environment. We have been thoughtful about the design of our working environment. Our offices include an open-plan office space, meeting rooms, a quiet room and our London facility has cycle-racks, a quiet room, shower facilities, and a communal eat-in-kitchen with a wide range of complimentary healthy-eating options provided.
The environmental impact of our operations is most materially built up through our offices and business travel. In consuming natural resources, including energy, water and natural materials, externalities such as carbon emissions, wastewater and landfill are generated.
We seek to reduce the direct negative environmental impacts of our activities, and influence the indirect negative impacts through our sourcing, usage, and offsetting decisions. We achieve this by:
- Responsible sourcing decisions
- Minimising our resource usage through conscious choices
- Offsetting what we see as the emissions from our operations on an annual basis.
Sourcing: Our most significant sourcing choice is that of our offices, of which the majority of the Generation team is based out of London. Our offices in London and New York were purpose-built with sustainability in mind.
In London, our office at 20 Air Street was built expressly to achieve the highest standards in energy performance, achieving the "Excellent" rating by BREEAM (Building Research Establishment Environmental Assessment Method). A proportion of energy and heat is sourced from photovoltaic cells, thermal stores and combined cooling, heat and power units. In addition to a rainwater harvesting system, an intelligent lighting system is in place as to maximise natural light and limit wastage.
Generation consciously designed the London office fit-out to further minimise the environmental impact of its operation and achieved the gold Ska rating. Technologies include personalised energy feedback systems, heat recovery processes, low VOC paints, and the use of sustainability certified or recycled wood wherever possible.
Our New York office at One Bryant Park is one of the most energy efficient, ecologically friendly buildings in New York. In addition, the office occupies a space that received a Platinum LEED (Leadership in Energy and Environmental Design) certification for Commercial Interior Design. It was the first skyscraper to achieve a Platinum LEED certification for environmental excellence.
To help us make the most of the office features we have installed, we commissioned a consultant during 2013 to analyse areas we might be able to further reduce the energy consumption of our London office and enhance information sharing across the Firm. As part of this process, the consultant collected, analysed and reported energy use of the London office.
Both offices work with building managers on an ongoing basis to prioritise energy efficiency and sustainable practices. Other business-related sourcing decisions include local travel and office supplies, and we source environmentally-friendly suppliers for these wherever possible.
Usage: We look to actively manage our environmental impacts from our business activities. Our largest impact arises from business air travel. While we regard travel as a necessary part of our business for investment and client-service purposes, we encourage our team to constantly evaluate their travel arrangements and where possible, develop efficient travel itineraries and use alternate forms of communication such as video and teleconference facilities. During 2013 we increased the number of teleconference facilities available and are working with a technology specialist to help us enhance their quality.
Carbon Offsets: As a firm, we are committed to offsetting what we see as the unavoidable emissions of Generation works with a portfolio of off-set providers to purchase the highest standard of carbon offset instruments. On an annual basis, we choose to more than sufficiently cover not only the emissions from electricity use, commuting and business travel, but also the footprint generated by Generation team members and their families in the course of their personal lives.
Second Order Impacts: The Deployment of Capital
Clients and Investee Companies
We manage assets on behalf of clients, including institutional investors, foundations, family offices, endowments and high-net-worth individuals from around the world. Our clients hold us to the highest standards of performance and sustainability research. To develop enduring client partnerships through the pursuit of superior investment performance, original investment insights and exceptional client service we seek to:
- Diligently implement our investment process;
- Align our commercial interests with those of our clients;
- Provide insights on sustainability topics; and
- Operate a robust compliance, administration and risk management system to protect our mutual interests.
Investment process: We integrate sustainability research with fundamental analysis in our investment process. Our investment philosophy is based on our conviction that sustainability risks and opportunities directly affect long-term profitability. We believe that the interests of shareholders, over time, will be best served by companies that maximise their financial return by strategically managing their economic, social and environmental preference.
We look to invest in high-quality companies and management teams that are well positioned for the long-term, and who responsibly manage the relevant and material sustainability opportunities and challenges they face.
As a result of broadening the spectrum of information we consider in the investment process, we are likely to have a unique perspective on a company's management quality, business quality and valuation. We believe that our investment process enhances the opportunity to deliver long-term superior investment performance to our clients.
Client Alignment: We fundamentally believe in the importance of linking our own incentive structures to our clients' interests, and have established our commercial arrangements in such a way that ensures that we are aligned with our clients' long-term performance results. This is also evidenced in the way we remunerate our investment team according to their long-term performance; that we provide opportunities for staff to be invested in our funds alongside our clients through direct investment or employee incentive plans; and that all partners participate in the profitability of the firm.
Investment and Sustainability Insights: We are fortunate to have an engaged and like-minded client community who hold us to the highest standards of investment performance and sustainability research. To encourage discussion, action and engagement, we look to provide our clients with research insights into global sustainability topics, and convene a global conference approximately every 18-24 months to share thinking and perspectives on sustainability issues. In addition, we actively share the work of the Generation Foundation, and have recently launched the circulation of periodic "Sustainability Research" to facilitate the transfer of our research to our clients and engaged stakeholders. During early 2014, we organised our inaugural Women's Leadership Summit to encourage discussion and idea sharing with our clients around the different leadership roles of women, and how policies and practices can support the promotion of women within business organisations.
Compliance and Control: A core tenet of Generation is that success is built upon the quality of its people, its investment process and its controls. The Firm's organisation and governance structure ensures there is clear segregation of responsibilities and accountability at all levels. The integrity and experience of our people combined with the broad knowledge provided by external industry professionals ensure compliance and internal controls are executed at the highest standard.
In seeking to achieve our goal of delivering superior long-term investment performance, we deploy capital into a number of companies that we consider to be part of the solution to some of the world's key sustainability challenges.
We seek to:
- Invest with a long-term investment horizon
- Be responsible owners
- Develop long-term relationships with our investee companies that enable constructive dialogue
Long-term Horizon: We operate with a long-term view because we believe that the majority of a company's value is derived over a long-term investment horizon, and that short-termism can lead to poor and misaligned business decisions. As shareholders investing with a longer-term horizon we can support and encourage companies to focus more on their business objectives and less on quarterly metrics. We believe that this will ultimately result in more sustainable and aligned business decisions, and to the overall sustainability of capital markets.
Responsible Ownership: We take our responsibilities as shareholders very seriously. Of particular importance to this commitment is our approach to corporate governance. For example, each analyst is responsible for voting the proxies of the companies they follow. While we have access to specific external voting recommendations, we do not automatically adopt them. We believe each analyst should review the relevant corporate governance issues on a case-by-case basis and exercise his or her best judgment given their knowledge of the companies under their coverage.
Constructive Dialogue: We engage with companies as a means of enhancing and protecting our investments. Our analysts are responsible for maintaining an ongoing constructive dialogue with investee companies, interacting with management teams on a regular basis and engaging them on topics that include relevant and material sustainability issues as well as traditional business-related matters. We also hold Board seats on a number of companies within our Climate Solutions Fund. Through these privileged positions we are able to have significant influence on the topics we consider relevant to our investments. Our interest and engagement with companies across all levels provides the opportunity to promote positive corporate behavior, develop stronger long-term relationships, reduce risks and enhance our company-specific research.
Third Order Impacts: Our Broader Impacts
Capital Markets, Society and the Global Environment
As an investment manager, we are an industry participant in the capital markets. We recognise our responsibility to the industry to help maintain its integrity by being a good corporate citizen. We also recognise the opportunity we have to promote the business case for sustainable investing—and thus promote a more sustainable form of capitalism.
To play our part in maintaining the integrity of the industry; to promote the business case for sustainability investing, and to change capitalism's current operating model to one that integrates sustainability throughout the value chain we seek to:
- Operate a best-practice control environment
- Promote the business case for sustainable investing through the Generation Foundation
Control Environment: Generation recognises that as a market participant it has a duty to operate with the highest ethical standards. Our control environment has been developed to ensure compliance with securities regulations, industry best practice and client guidelines in the execution of its responsibilities. Independent external professionals provide expert advice, compliance monitoring services and audit functions to ensure Generation has strong controls which are being consistently applied.
Sustainable Investing: We believe that integrating sustainability research into a traditional investment process has the potential to deliver superior long-term investment performance for our clients. We regularly promote the discussion of sustainability topics with fellow capital market participants, and engage the broader financial community through the development and dissemination of advocacy pieces through the Generation Foundation.
We recognise that as individuals we have a responsibility to live in accordance with our values and to be responsible to the communities in which we live and work. We recognise that we have the resources to make a positive contribution to the development of sustainable societies—both in our local communities and abroad.
The objective of the Generation Foundation is to achieve the mainstream adoption of sustainability throughout global markets. In addition to the Foundation's agenda around working to mainstream sustainable capitalism, the Foundation encourages team members to pursue their philanthropic interests through match-giving and community service programs. For further information, please visit Generation Foundation.
Each of us is a beneficiary of and participant in the global environment, and has a moral responsibility to future generations to protect it. Of the many global threats, we believe the climate crisis is the most urgent and we recognise that we have a role in promoting public awareness of this challenge, and how to solve it—and in supporting the transition from a high-carbon to a low-carbon economy.
We are advocates of promoting awareness of the global threats to the environment and believe strongly in the development of solutions that will address these issues. We continue to represent our views as signatories and participants in many global initiatives, as well as to produce advocacy pieces on the topic. A full list of these initiatives and our thought leadership can be found at Global Collaborations.
- Although Generation seeks to provide superior investment performance, potential investors should be aware that this is an aspiration and there is no guarantee that this goal will be obtained.↩