Al Gore Launches Climate Change Asset Manager
Former US Vice President Al Gore and financier David Blood have put together a new asset manager that they say will disrupt the traditional investment model by prioritizing the fight against climate change over financial returns. short term.
Just Climate, which launches Wednesday with a mandate to invest in solutions that will help limit the rise in global temperatures to 1.5 ° C, has already secured support from Microsoft, the Irish sovereign wealth fund and a related foundation to the Ikea flatbed retailer.
Blood, the former head of Goldman Sachs Asset Management, said the new investment firm will focus primarily on private markets, taking a long-term approach to investing by supporting projects and businesses for periods up to to 15 years in the fields of energy, transport, construction, agriculture and other industries.
The launch comes as the investment sector comes under increasing pressure to play a larger role in the transition to a low-carbon economy, with critics saying the sector is not doing enough to fund climate solutions. or use its shareholder power to control fossil fuel producers. .
Blood, who created sustainable asset manager Generation Investment Management with Gore almost two decades ago, said there was a need for capital markets to change the way they value investments with more emphasis on impact.
“By not prioritizing impact, we are not going fast enough [to tackle climate change], “he said.” The status quo will not allow us to cut emissions in half over the next nine years. “
While not attracted to the size of the first fund, Blood said Generation’s partners will contribute around 3% of total assets and that he hopes Just Climate will be “as big as Generation within months and coming years”. Generation’s assets under management are approximately $ 36 billion.
While the traditional investment model initially focuses on financial metrics, Just Climate will instead start with the potential impact of any investment in terms of tackling global warming, Blood said. “This is what drives the allocation of capital,” he said, but added that the company was a for-profit business and the new model would still operate within a traditional risk and return framework.
He added that while there are booming climate solutions for many sectors, investors have often overlooked them as they are often too capital intensive, untested on a large scale, in difficult geographies or take too long to be commercially viable.
“There is definitely a lack of capital. But most importantly, there is an impact gap. Right now, when we look at the opportunities that will decarbonize the economy the fastest, capital is not reaching them. “
Blood will chair the new investment firm, while Shaun Kingsbury, former Managing Director of UK Green Investment Bank, will assume the role of Chief Investment Officer. Kingsbury said Just Climate could “play a pivotal role in funding these generally heavy elements of climate transition.”
Gore, who recently warned that the entire financial system must be reformed if global warming were to abate, will chair the new asset manager’s climate impact advisory group.
“As a sector, we urgently need to seriously rethink the way capital is allocated in order to make real progress towards the net zero commitments we have made,” he said.
Microsoft’s climate innovation fund, Irish strategic investment fund, Imas Foundation, part of the Ikea flat furniture empire, and Harvard Management Company, the body that oversees Harvard University’s endowment , are among the founding clients of the asset manager.
Lucas Joppa, Environmental Director at Microsoft, said: “Through this partnership, we look forward to helping develop areas of work that will contribute to the global need to decarbonize and act as powerful assets in the fight against climate change. “
Blood said the asset manager hopes to make his first investments by the end of the year. Just Climate was created as a separate company from Generation, although Generation partners are the owners of Just Climate.