David Blood is Co-Founder and Senior Partner of Generation Investment Management.
The firm was founded by Mr. Blood and Former Vice President Al Gore in 2004. They currently have more than $17bn in assets under management and are dedicated to investing in sustainable companies that provide goods and services consistent with a low carbon, prosperous, equitable healthy and safe society and embrace “sustainable capitalism,” a “framework that seeks to maximise long-term economic value creation by reforming markets to address real needs while considering all costs and stakeholders.”
Much of the research Generation has published over the last decade has been influential in my own thinking about sustainable and impact investing. They have played a major role in how I evaluate the companies in the Swell portfolios. Needless to say, I was nervous about meeting him, I mean, he’s kind of a big deal. However, I put on my brave face, and asked him if he would talk to Swell about his firm’s approach to sustainable investing and he agreed.
In an amazingly pleasant chat that I had hoped would never end, Mr. Blood revealed some pretty interesting facts about himself, his work, and his world view. Here are my key takeaways:
He was rejected from the Peace Corps
When discussing his beginnings in sustainability and impact investing he says it’s been a lifelong interest – even when it didn’t work out as planned: “As I was growing up I spent time in Brazil, an amazing country where, sadly, many suffer terrible poverty. I attribute my early exposure to this poverty in Brazil to the development of my lifelong interest in social justice, inequality, poverty, and development. In fact, I had at one time hoped to be part of the U.S. Peace Corps; however, they rejected me...which was troubling because it’s a volunteer organization.”
He thinks impact is poised to take off –in a big way
In talking about what’s down the road he says, “We agree the overall scale of the opportunity, and the many trillions of dollars currently thinking about these issues, is really quite meaningful and increasingly becoming mainstream. We would certainly be surprised if it were not completely mainstream over the next three-to-five years.”
He agrees that the terms can be confusing
We talked a bit about the struggles of bringing impact investing to a larger audience and the inherent troubles, he agreed that “the main challenges we face are language, clarity in regards to who is part of which branch of sustainable investing (i.e. SRI vs. ESG vs. Impact), and measurement of impact.”
He believes that the people make the difference
We spoke a bit about how the metrics change as your evaluation processes evolve – but he keeps coming back to one thing: the people. “Anyone investing in a software business or a financial services business, really ought to understand the culture of the organization and how they attract, retain and develop people. However, not everyone understands the real importance of this over a long period of time.”
He’s all about the long-term and would like to see a shakeup in market valuations
Blood says that at Generation, “we are committed to long term investing, what we're saying is that we think we'd like to own businesses for three to five years or longer, perhaps even forever. Once you make that statement, it drives you, by default, to be more intensive and more holistic in how you analyze businesses. Ultimately, we think long term investing is best practice and therefore we have developed an investment process that allows us to be holistic in how we analyze businesses and management teams.”
He likes us, he really likes us
When talking about platforms offering impact investing to retail consumers, he says that, “We have been criticized at Generation because we are an institutional firm and do not accept retail clients. We acknowledge our business leaves a gap in the market since retail consumers can’t invest their savings with us. So we think it’s a great thing that firms like Swell are able to develop and offer retail consumers interesting and important sustainable investment strategies that have impact.
He loves his family
Finally, we chatted a bit about inspiration, how he relaxes, and what motivates him. “For me to truly relax, I will either be spending time in the company of friends and family, usually around a dinner table, or exercising. I try to do a lot of both.” As for inspiration and motivation, he unsurprisingly noted the UN Sustainable Development Goals, wisely adding that “others will be the judge of whether we leave a positive legacy on the world. But we're sure going to give it a go.”