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Generation Investment Management LLP

PRI reporting framework 2020

You are in Strategy and Governance » Governance and human resources

Governance and human resources

SG 07. RI roles and responsibilities

07.1. Indicate the internal and/or external roles used by your organisation, and indicate for each whether they have oversight and/or implementation responsibilities for responsible investment.

Roles

Select from the below internal roles

07.2. For the roles for which you have RI oversight/accountability or implementation responsibilities, indicate how you execute these responsibilities.

Generation's mission is to provide superior long-term investment returns [1] to its clients through the integration of sustainability issues within a rigorous framework of traditional financial analysis which will ultimately prove the business case for sustainable capitalism. There are a number of aspects of Generation's governance, management and team structure, and processes which we feel are important facilitators of this mission: culture, the Firm's partnership structure, the investment team's incentives, and a flat managerial structure. This allows for oversight and implementation of our investment philosophy and mission to be embedded within all individuals at the firm, at all levels. All individuals in the investment process and, more broadly, everyone at the firm feels responsible for the firm's mission and our core values. 
1. Culture - Generation is a mission-driven organisation and all team members feel aligned to this mission. The most powerful way to achieve our mission is through achieving superior investment results to our clients and therefore individuals are driven towards this goal. We are proud to have
created a place where our team members can lead interesting professional lives in a way that is consistent with their values. The Generation Foundation and the advocacy work that it does, is one way in which team members can contribute more broadly to topics that are of interest to them and is an important part of our culture and identity.
2. Partnership Structure - A culture of shared ownership is emphasised by adopting a partnership model. Partners share in the profitability of the Firm, which is linked to achieving long-term superior performance (primarily due to the fee arrangements in place based on 3-year performance) and therefore focuses the team on long (rather than short) term results.
3. Incentives - The investment team's compensation is based on investment performance over a one and three-year investment horizon with equal weight to each period. They are also rewarded for their participation to the whole team's research agenda, which we are constantly seeking to improve and develop our understanding and identification of the long-term sustainability trends.
4. Flat managerial structure - By operating a relatively flat structure, Generation encourages all team members to contribute to investment research and analysis. In valuing diversity of views and perspectives, Generation is able to ask thoughtful questions and become increasingly better long-term
investors. The firm's management committee is supported by an operating committee with representatives from across the business. This ensures all perspectives are recognised and valued. 

5. Investment team structure - ESG analysis is embedded within our investment process, which is deliberately structured to be team-based so that analysts, sector heads and portfolio managers hold one another accountable and provide appropriate oversight to ensure all material ESG issues are considered in analysis. In this way, everyone is responsible for providing oversight to the process and in this way it is self-preserving. We do not have separate sustainability analysts, but rather, all investment analysts are responsible for incorporating ESG analysis into their research.

[1] Although Generation seeks to provide superior investment performance and attract the “best” professionals, this is an aspiration and there is no guarantee that this goal will be obtained.

07.3. Indicate the number of dedicated responsible investment staff your organisation has.

90 Number

07.4. Additional information. [Optional]

We consider all individuals of the firm to be dedicated to responsible investment.


SG 07 CC. Climate-issues roles and responsibilities

07.5 CC. Indicate the roles in the organisation that have oversight, accountability and/or management responsibilities for climate-related issues.

Board members or trustees

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Risk Officer (CRO), Investment Committee

Portfolio managers

Investment analysts

Investor relations

07.6 CC. For board-level roles that have climate-related issue oversight/accountability or implementation responsibilities, indicate how these responsibilities are executed.

Climate change consideration is integrated across all Generation’s business areas, from sourcing decisions and management of the Firm’s operations, to our public and private equity investment strategies. While specific people have responsibility for execution in some cases, we consider it everyone’s responsibility to be mindful of the urgency of climate change mitigation, in the course of both their professional and their personal lives. This is intrinsic to the Firm’s mission and core values, and the Management Committee has ultimate responsibility for ensuring this remains a key part of the culture. In the case of our investment products, we explicitly do not have separate sustainability and investment analysts. All our investment professionals are responsible for considering climate implications and all material sustainability issues into their sector and company analysis. The Firm’s advocacy arm, the Generation Foundation acts to accelerate the transition to a more sustainable economic system, and has identified Climate Action as a strategic priority.

07.7 CC. For management-level roles that assess and manage climate-related issues, provide further information on the structure and processes involved.

Please see above.


SG 08. RI in performance management, reward and/or personal development

08.1. Indicate if your organisation’s performance management, reward and/or personal development processes have a responsible investment element.

Board members/Board of trustees

08.1b. RI in personal development and/or training plan

08.2. Describe any activities undertaken during the reporting year to develop and maintain Board members’ skills and knowledge in relation to responsible investment.

A proportion of the firm's management committee's OKRs for the year include a focus on impact objectives.

Chief Executive Officer (CEO), Chief Investment Officer (CIO), Chief Operating Officer (COO), Investment Committee

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Portfolio managers

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investment analysts

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

Investor relations

08.1a. RI in objectives, appraisal and/or reward

08.1b. RI in personal development and/or training plan

08.3. Provide any additional information on your organisation’s performance management, reward and/or personal development processes in relation to responsible investment.

Responsible investment is the way that we invest. We do not separate the two and consider all individuals' personal objectives and incentives aligned with the firm's mission. The firm's commercial arrangements and incentive plans are deliberately structured to be aligned with our clients, and focus on meeting our performance objectives through integrating sustainability into a traditional investment approach.


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