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💸 ESG Dollars under Management

My Climate Journey

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Table of Contents

Host: Jason Jacobs
Guest: Lila Preston | Head of the Growth Equity Strategy | Generation Investment Management
Category: 💸 Investing

Podcast’s Essential Bites:

[3:33] “Generation is a dedicated sustainable investment firm. We were set up in 2004 by a group of founding partners and really from the beginning, the aim was to put sustainability at the core of an investment process. And we did that because we thought it could deliver the very best performance for our clients. We manage money on behalf of large institutions, pension funds, endowments, foundations, endowments, and university and other. And ultimately, we believe a long term horizon is required. It is best practice if you're taking that long term view that you understand the holistic […] management quality, and ultimately build very deep research underpinning companies that you back. […] We focus on both listed equity, so public equity and private equity.

[25:20] “When we think about backing sustainable solutions businesses, […] we're looking for disruptors and innovators. So really the drivers of a shift. And therefore, in most cases, they're beyond incumbent industries, they're actually maybe developing the next wave of a technology or a solution. In the context of the food system, these are shifting to biological based inputs away from maybe incumbent chemistries, they're moving to more circular business models away from […] use and then dispose. They're moving towards a more distributed future of work, where people can be more resilient and working from their location of choice as compared to centralized kind of command and control. They're delivering financial services in a way that is even leapfrogging some of the previous incumbent models, and […] energy distributed renewables.”

[27:28] “As you look at the capital flows associated with ESG […] dollars under management, it is abundantly clear that there's been a shift in the market. […] Sustainability related financial volumes, I think have tripled since 2015. You today have 6% of the global market cap coming from green economy, that's up from 2% in 2015. That's still small, but growing quickly. […] ESG volumes [had] a tenfold increase in flows since 2015. And those dollars wouldn't be flowing if there wasn't an indication that this is either better risk management, […] but also a way to seize opportunity in the market in terms of delivering long term performance.”

[47:14] “[I consider carbon removal and its role in getting us to net zero as] critical. And [it] requires different risk appetite and risk capital. But will be a part of the mix. It will be in combination with everything on the reductions front. So removals and reductions have to both be taking place as fast as possible. And concurrently. […] There should be [a universal price on carbon]. […] It would be a very important market signal and very valuable for financial investors in the transition to net zero.”

[48:13] “Reforestation is a very important, easy to do immediate action. […] I think also the role of regenerative agriculture practices in driving up soil carbon and then just removing emissions in season, so having emission reduction activities concurrent with building stored carbon in soils, is really critical. And […] the power of mangroves. One of the interesting anecdotes that came through in the sustainability trends report this year was the opportunities globally to build mangrove ecosystem services. They are 400% more productive as a carbon storage mechanism, even in tropical forests.

[51:31] “If you […] say that this sustainable investment agenda [and] you think it's different or separate from mainstream investment, I think that's a real challenge. I think we've hit the end of […] do no harm or business as usual investing. And there's a really important moment to recognize that all investments, all companies have an impact, positive and negative. There is no investment that doesn't. […] I think […] the mental shift to all capital managers, capital owners, as well as individuals is just to take that into your day life, recognize that there are consequences, positive and negative to all your actions. And in finance, it is no exception. […] It is not acceptable to just do no harm, we have to be shifting towards that system’s positive future, as soon and as fast as possible.”

Rating: ⚡⚡

🎙️ Full Episode: Apple | Spotify (Original Title: "Lila Preston, Partner & Head of Growth Equity Strategy at Generation Investment Management")
🕰️ 55 min | 🗓️ 08/16/2021
✅ Time saved: 53 min

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