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Generation Investment Management LLP

PRI reporting framework 2020

You are in Strategy and Governance » Innovation


SG 18. Innovative features of approach to RI

18.1. 責任投資へのアプローチの特徴が特に革新的であるかどうかについて説明してください。

18.2. 特に革新的だと思う責任投資へのアプローチの特徴について説明してください。

We believe our process of integrating sustainability research with fundamental equity research is an innovative approach to investment management and that gives us a strong competitive advantage in investing for the long-term. To add value an investor needs to identify sources of value that are not easily found by others. Generation’s approach rests on the following three pillars:

a. Long-term investment horizon; a relative minority of active managers take this perspective.

b. Integration of sustainability research with fundamental equity analysis in our investment process. We believe few fund managers have the combination of process and people to undertake this in a systematic and comprehensive manner. We also believe that sustainability factors have material impacts on shareholder value over the long-term. Sustainability research provides us with “additional” information which we believe few people consider, and those that do, often struggle to integrate it effectively. As a result of broadening the spectrum of information we consider in our investment process, we are likely to have a different perspective on a company’s management quality, business quality and valuation.

c. Concentrated portfolio. Our analysts cover a small number of companies each (maximum of 12 companies). Because of the intense coverage of a company by our analysts, we expect to understand our stocks better than most managers, and expect to have a higher level of engagement with the management team.

In addition, among managers who do seek an RI approach, we feel fortunate that our financial analysts also consider themselves sustainability analysts, including at the portfolio management level. This is key to our ability in identifying and linking sustainability issues to the long-term financial success of businesses and avoiding a prescriptive approach to predetermined RI criteria across sectors.

Our experience within the private equity space has led us to find that our expertise, skills and network is highly valued by entrepreneurs. We are fortunate to build on a long history of experience in sustainability, where our professionals have spent whole careers in the space, beyond their time at Generation. We recognise this privileged position and feel fortunate that we are able to inpart of knowledge to innovative entrepreneurs that we believe are helping to lead the transition to a more sustainable economy.