Generation Investment Management

SYNOPSIS

Generation Investment Management (Generation), co-founded by David Blood, retired head of Goldman Sachs Asset Management, and former US Vice President Al Gore, was a, "sustainable investment" firm that operated with a philosophy that non-financial factors such as environmental, social, and corporate governance (ESG) practice influenced a company's long-term risks and financial performance.

David Lowish, director of global industrials for Generation, must decide whether to recommend that ABB India (ABB), a large power company, be added to the firm's "focus lists," a group of roughly 100 companies from which Generation selects companies to invest in.

KEY LEARNING OBJECTIVES

Examine a model of sustainable investing, or "accountable capital," that aims to produce excellent returns and serve the broader needs of society at the same time.

Practice conducting a "sustainable analysis" that incorporates environmental, social, and corporate governance factors into investing decision-making.

Learn how to integrate ethical commitments into work roles and careers.

SUGGESTED QUESTIONS TO PREPARE THE CASE

General questions on SRI:

1.   When and where was SRI born? How did it evolve since then? What other ideas/trends/events helped to grow the public awareness of SRI? Is it a global force? Is it still a trend or is it already set and stable?

2.   What definitions can you find on SRI? Could you define it? Can toy identify the agents operating in the SRI market? What do they do differently?

3.   What general opinions do you find in the debate  on SRI performance?  What is your opinion? Would you base your own investments in the SRI criteria?

Specific questions on the case:

1.   Would you invest in Generation's Global Equity Fund? Why, why not?

2.  What, if anything, is distinctive about Generation's philosophy compared to standard approaches to asset management and socially responsible investing (SRI)?

3.   Should Generation add ABB India to its focus list?