Generation's Investment Philosophy
Our investment philosophy is based on our conviction that sustainability risks and opportunities directly affect long-term business profitability. We believe 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 performance.
Investing for the Long-Term
Numerous studies show that most of a company's value is determined by its long-term performance, and in our view a short-term orientation has significant negative repercussions for businesses and the global economy. If businesses are forgoing value-creating investments to manage short-term earnings, this will damage their long-term prospects. A short-term perspective hinders innovation and research and development, diminishes investment in human capital, encourages financial gymnastics and discourages leadership. We believe outperformance is achieved by taking a long-term outlook.
Sustainability is Material to Business and Markets
Central to our investment philosophy is the explicit recognition that sustainability factors directly affect long-term business profitability. The interests of shareholders, over time, will be best served by companies that maximise their financial performance by strategically managing their economic, social and environmental performance.
A Systemic View of Global Challenges
When considering sustainability, Generation focuses on the entire spectrum of interrelated factors. This means judging solutions on a life-cycle basis and considering the complete set of inputs, costs and externalities. Sustainability challenges are increasingly interconnected: the climate crisis and poverty, pandemics and demographics, water scarcity and migration/urbanisation. We never consider sustainability challenges in isolation.
Sustainable Development is Economically Transformative
Today, the global context for business is clearly changing—capital markets and capitalism are at a critical juncture. We are convinced that the transition from a high-carbon to low-carbon economy will be the most significant process in modern economic history—matching the Industrial Revolution in scale, and the technological revolution in pace. We believe investors are increasingly aware of the materiality of this transition for business, and we think financial markets have a significant opportunity to chart the way forward. In fact, we believe sustainable solutions will be the primary driver of industrial and economic development for the coming decades.