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David Blood

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2020-06-22

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2020-06-22

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1. “Definitely controlling my emotions. My younger self I was too quick to show, unfortunately I have a little bit of a temper, I was too quick to show that temper leaders need to be in control. Sometimes leaders should express happiness and express frustration, but mostly you should be in control because when you're not your best self and then you often spend a fair amount of time fixing the mistakes you make when you've lost your self-control a little bit. So self-control is definitely top of the list.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

2. “Well, integrity, for sure, and I think resiliency my mom used to say stick to itness, and I've always felt that quitting is just not one of the things you do if you get knocked down, you get back up. And there's going to be setbacks and the folks who I think are most successful over time or the folks who can get back up. And that's true in the investment business too. You don't always outperform, as you know, and it's learning from those challenges and then building back from those challenges.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

3. “I try to learn from my mistakes. I think that is a critical cultural point at generation. Our investment teams are always talking about what they could do different and better. Investing is really hard. If you are a great investor, you get it right about 55 to 60 percent of the time, which means you're wrong. 40% of the time, I'm wrong much more than 40% of the time. And so learning from those mistakes, I think by far is the best thing you can do as a business professional investment professional and indeed as a person.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

4. “We talked about it, folks who think that sustainability in ESG is about trading values for value, and we don't. We fundamentally think that the business case is clear, it's robust, and we feel very passionate about making that case.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

5. “I think people who are late I learned that at Goldman Sachs I feel like if you are meant to turn up at a meeting at two, you ought to turn up at five to two. And when you turn up at quarter after you've kind of kept a lot of folks waiting and that's not very polite.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

6. “It's been terrible. And all I can tell you is my family thinks it's a good thing. They're not looking forward to athletics coming back on TV.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

7. “It is definitely sports. If I read a newspaper, I turn the sports section first. I love all sports, team sports. I grew up in Michigan. I'm a Tigers fan. I'm a Red Wings fan. I'm a Packers fan. And because of my friend Mr. Ferguson, I'm a Manchester United fan.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

8. “To rethink the relationship between capital, between business, between civil society and government. And we might need to think of a longer-term philosophy and framework on how we manage those trade-offs and think about those trade-offs over time. And I think, frankly, we will and that we will have a more sustainable form of capitalism over the course of the next 10 to 20 years than we've had over the last 10 to 20 years.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

9. “A public company, is it better to not furlough your people and keep them over the course of a crisis and spend more money than you would have otherwise, but build the loyalty of those people and those communities over the coming five to ten years? I think absolutely it's a no-brainer. But you only think about that on a long-term basis. Do you think it's a great idea to change your manufacturing processes so you can deliver personal protective equipment for our healthcare professionals and potentially have sunk costs in your manufacturing facilities because you've ramped up for that? Yeah, I think it's a great idea. But if you're just going to look at it over the course of 2020, probably not. But over a long term, easy. But to your point, there is no question that as we come out of the pandemic and we begin to reflate our economies, this is a once in a century opportunity.”

   2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

10. “It is a question that we've been wrestling with for some time, and I think the first thing to say is always important to think about a business model over the long term. And if you don't, then those questions can be very difficult to answer sometimes. They can be very black and white. But if you begin to think about, well, what's in the best long-term interest of a business, a private business?”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

11. “With great responsibility, great integrity throughout this crisis. And that's true for our private portfolio, too. We haven't talked much about our private portfolios, but we have been very actively engaged with both our public and private companies over the course of the last couple of months to ensure that they will operate with the same integrity and responsibility and commitment to sustainability that they always have. And we're pleased to say they are.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

12. “One firm that people, I think, don't know very well, actually, is a firm called Henry Schein. And Henry Schein is a distributor of healthcare, dentistry, and veterinarian products to dentists, to doctors, to vets. And they're run by an extraordinary management team who is committed to the long term, committed to culture, committed to values, committed to community. And frankly, how they behaved and demonstrated the strength of their business model and their conviction during this crisis has been extraordinary. And so people say, well, what is a distributor? How is that a sustainable business? What's green about that? Well, it's actually a really well-run business that runs itself for the long term, that takes multiple stakeholder views into how they operate. And I'll tell you, we've looked at many companies in our portfolio have reacted extraordinarily well.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

13. “Well, so our philanthropic activities have been mostly researched related. So we have been investing in organizations, initiatives that are researching around sustainability or climate change or a just transition. So it's not really been capital allocated. Now the additional 5% that we've allocated in 2019 that we're spending now, that might actually go into businesses that aren't currently commercial that we think can be transformational and catalytic to the transition to net zero or just transition. So that will be more investment oriented, but our foundation is really about sustainability research and then action around that research.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

14. “This isn't a political question. This is about how do you drive to a better resilient, robust economy. And that's what we have to keep making. That's why we've always felt that coming from investment backgrounds, we have a responsibility to always make the business case. We have strong views from an ethics and morals perspective, and we can make that case, but we've always felt very strongly we have to make the business case about investing sustainably because that's clear, it's robust, and it really will move the needle.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

15. “There's still a sense that sustainability and ESG is not serious. I often smile, particularly in the early days when we would go in, and particularly in America, we would go in and talk about sustainability in ESG. And I could just imagine the folks sitting across the table were just sort of thinking, you know what, these guys must go into a room, hold hands, sing Kumbaya, and that's how they make their investment decisions. And actually that is how we do it. No, I'm just kidding. But the point I'm trying to make is that there still is a sense that sustainability or ESG is about negative screening and it's about trading values for value. It isn't. It's a rigorous, robust investment framework business framework. That's why the business roundtable, that's why the World Economic Forum, these organizations, the British Academy, they recognize that multi-stakeholders is best practice business. And we have to make people realize this is a business question. This is an economic question.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

16. “Experiences over the next five years to hopefully help make a difference. And as I said in the very beginning, generation is an investment firm through and through. We want to deliver outstanding investment results, but we're also mission-driven firm. And the mission to address the challenges of climate as well as poverty and inequality are so critical now. And the opportunity to help make a difference in capital can make a difference. We're all in on this, Ted. We are all in on this.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

17. “It's a critical question that we've been wrestling with as an organization over the last couple of years, and our clients, our stakeholders, and most importantly, our employees and partners will insist that generation do more than just manage assets well for our clients. That's one of the reasons why we hired a head of communications. That's one of the reasons why we've hired Ed. We want to do more in terms of communicating and working and sharing the lessons we've learned over the last five to ten years. We also allocated an additional 5% of our profits this past year to develop other impact strategies. We will collaborate with anybody, whether it be on natural climate solutions, whether it be on climate first oriented investments, investments that are sort of catalytic, if you will. We are going to look to leverage our”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

18. “Isn't sort of incremental, it is transformational. Whole industry, and this is a great opportunity for investors. We think that the transformation to net zero will be the most important economic transition in history. And therefore, investors run significant risk as well as have significant opportunity if they manage this transition, this transformation very well. All investment decisions need to take climate and a just transition into consideration as we allocate capital over the course of the next five to ten years.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

19. “As we go forward, whether that be to address the challenges of climate, the challenges of the just transition, or indeed both because they're interlinked. We think the next five to ten years will be the most important years of our career. The challenges to meet the sustainable development goals, the challenges to meet a net zero are extraordinary. And now coming off the terrible tragedy of this pandemic and the human health and environmental health are clearly linked, the lessons learned from this tragedy are clear about early action, about managing the challenges that scientists have been telling us for years, the challenges of climate. Scientists were telling us about the challenges of pandemics. We need to act in advance and we don't have much time to do that. And capitalism and capital markets and investors will be critical in making this transition. And this transition is...”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

20. “The whole question about sustainability and ESG really drives down to a couple of points. The first is the notion that all investing has impact. Today we're learning, we're hearing a lot about impact investing, and sometimes we get confused by that, frankly, because we know that all business has impact and therefore all capital allocation has an impact. The question is, are you measuring it? Are you reporting on it? Are you trying, as we were just saying, to have more positive impact? as we go forward. And we think actually as time goes on, and by time we mean a couple of years, not decades, that all investors, all asset owners will be required, will require of us and probably their own stakeholders will require that their investment performance be based upon risk, return, and impact, impact being a critical component of allocation of capital.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

21. “OriSG perspective, we will sell that stock and it will go off the focus list. And that has happened. Facebook is an example of it. But on balance, as I said earlier, there are very few companies that are perfect. There are very few people that are perfect. And so we need to work within the shades of gray and work to make all of us better. And I'll talk about the urgency of the challenges here in a minute. But I think you could expect that generation will be more active and more engaged with management teams as we go forward because we're running out of time.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

22. “We often own these businesses for a long time. We know these management teams for a long time and we're working with them. There can be a point where they have not really taken our advice. And we don't know everything. And so sometimes it makes sense not to take our advice. But there are certain factors that, for example, a remuneration structure, where if we ultimately are uncomfortable with it, we will say so. And there have been instances where we've had to say so publicly. There may be instances, particularly as relates to climate change as we go forward over the next five to ten years. Now, most of our businesses have very, very small carbon footprints, but they may be able to do more. And we need to be prepared to be clear about actions that we expect our organizations to take, the companies we're investing in. I think the most important thing to say is if there is a violation of what we think is right from a sustainability”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

23. “We have a very strong conviction that engagement voting our proxies, engaging with management is our fiduciary duty, and we are very passionate about that. We have historically done that with our analysts. We've recently hired a man by the name of Edward Mason from the church commissioners here in the United Kingdom. Ed will be joining us, and we really want to even ramp that up. So yes, great businesses, great management teams. They can all still be pushed to do better. And we tend to try to do things behind closed doors. We're not activists, although we will be an activist if we have to be. But we think engaging with management on things that we know a little bit about, like sustainability, like governance, like capital allocation, like remuneration structures is our responsibility. And everybody a generation, all of our analysts.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

24. “Well, we very clearly talk about being long-term and our portfolios will turn over sort of once every two or three years. Now, people would say that doesn't seem very long term at all compared to some long-term investors. And we would say, yeah, fair enough, except that there's two other factors that we think about. One is we are very price driven. And so our turnover sometime is driven by adjusting to price. And secondly, the real question for us is what's the turnover of our focus list? That's 125 companies that we're actively covering, and that's more like 10%. So we are truly trying to find great businesses and own them for a long period of time, forever, if possible, but it's typically not possible.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

25. “The statisticians among us will tell you that you can diversify, you'd have a perfectly well diversified portfolio at sort of 20 to 25 stocks. And I know the math and that's true. And we tend to find that our 10 biggest positions can be sort of 40 to 50 percent of our portfolio. But we do like the tail, if you will. It helps us think about how we might deploy and raise up positions as we go forward. And so having a bit of a tail of businesses makes sense. Plus, there are some businesses that we would like to own that are either smaller or are in a more risky areas. And so from a risk management perspective, it makes sense to have a smaller position. And that's about concentration. And we know that concentrated portfolios are best practice investing.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

26. “Ultimately, that's the decision for Mark and Miguel. Mark and Miguel cannot buy something unless it's on the focus list. And the focus list is voted on by the entire global equity team. We wouldn't necessarily call it has to be unanimous, but we clearly tried to ensure that the votes are equally based, if you will. So we actually have a rock-paper scissor system of voting so that everybody votes at the same time. We're very focused on biases and ensuring that we give everybody a voice in how we're thinking about investing. But ultimately, while we're very team driven, ultimately Mark and McGill have the X on their heads to deliver strong investment results, and they have done so.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

27. “And our approach to investing has always been let's really understand businesses really, really well. Let's invest in a small number that we think are attractively priced. But let's be ready to buy others when market prices change. And so if it's on our focus list and we don't own it, we're covering it as if we own it because we think we'll get the opportunity to do so.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

28. “When I talk about drivers of change and sustainability, people often will then think we're sort of a top-down manager, and we truly are not. We believe that sustainability is a driver of economies, and we have to understand that. But we're bottoms-up stock pickers. And so if you sit in on our investment meetings that Mark and Miguel run, they're basically, as you would see in any bottoms-up stockpicking organization. It's about understanding how businesses operate, how management teams are operating. We just have a larger list of things that we think are relevant to the success of business that we're integrating and reviewing in our assessment of those businesses. And incidentally, to get on our focus list, it takes months.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

29. “I mentioned earlier, generation wanted to be a boutique, we are focused firm, we basically do global equity, Asia equity, growth equity, and long-term equity. So we determined that we would assess quality, and we wanted to be a high quality manager. So we will invest in high-quality businesses, high quality management teams. We know very well that another approach could be to find companies that are less good and work to make them better or find businesses, management teams that are in transition, value-oriented, if you will, to use that analogy. And we concluded that that's a good idea, and we know some firms who are doing it, and they're doing it actually quite well, but that's not us. We are trying to buy great businesses and great management teams with a margin of safety, which I know you would say, well, I've heard that about a thousand million times, but that's what we're really trying to do.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

30. “Sustainable ESG investor. And that's, again, as sustainability in ESG goes mainstream. And we believe it is already mainstream, but it certainly will become mainstream over the course of the next couple of years. It is really critical that the rigor of sustainability in ESG is enhanced and that people continue to learn and that they don't revert back to sort of a checklist or a check box exercise and that we kind of develop these indices and it's either a bad company or a good company based on a specific approach. That will be a mistake because as I said there are clear violators of sustainability in ESG but very often what makes a good company versus a great company is based on nuance in understanding the holistic situation of a business.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

31. “It is something that we're wrestling with all the time. What we thought about in two thousand five is different than what we're thinking about in 2020, what we thought about even a couple of years ago. It continues to evolve. The urgency of those trade-offs and the learnings around those trade-offs continue to evolve as well. The critical insight that we've had over these years is sometimes there's clear lines. There are certain businesses that there's just no chance we would ever invest in them. There's sustainability criteria or their ESG thinking is just so terrible we wouldn't even consider it. But there's not that many. There are quite a few businesses that are potentially good businesses that can have positive impact. And I want to come back to impact here in a second, but that there are trade-offs in understanding and weighing those trade-offs and learning from the mistakes you make is critical to being.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

32. “As you're going through research on, say, one of the companies on the focus list or something that's on the bubble of the focus list, how do you think about measuring or assessing when there's a business that kind of conflicts on different factors? So maybe they're making good strides on the environmental side, but they have some issues with work or safety or something like that.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

33. “Difference in we think in terms of developing risk models as well as the ability to choose great businesses that will be successful as we transition to a more sustainable economy is to recognize that things are going to change and evolve over this period of time and we have to recognize that there will be trade-offs and in certain cases steps forward, steps backwards, and then managing that discussion over time. And the fact that we're having the discussion is what I think allows us to make good investment decisions. If an investor isn't recognizing that these issues matter to the success of business, whether it be sustainability issues or ESG issues, that's where investors are making a mistake. They fundamentally matter. That's why they should be integrated into investment processes.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

34. “Point is that you have to think of these questions holistically. You have to think about which issues matter to the industry or the company you're talking about. It's not one size fits all. You have to be very, very holistic in understanding those businesses. And then you have to be prepared to be wrong. You have to be prepared to continue to iterate and understand the types of issues that are driving the success of those companies and businesses. So for example, and I think my partners hate it when I say this, but we were investors in Facebook early on. And we ultimately decided that how they were treating information and how they were dealing with some of their challenges, which they still have, was unsatisfactory to how we were thinking about sustainability. And so sustainability in ESG is not black and white. It's really gray often.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

35. “Well, it's sustainability in ESG help us define the quality of business and quality management. So everything we do has a component of sustainability in ESG in it. Now, sometimes we will call sustainability out specifically, or more often than not, it will be implied. It will be embedded into how we think about a type of business or a management team. And frankly, this is an insight that we've developed over time. First of all, it's not a checkbox exercise. So the extent that organizations are looking to bring in sort of sustainability or ESG research and that they run their screens based only on the checklist, we think those experiences will be less robust because sustainability in ESG often are nuanced and there's trade-offs and there's subtleties and that's the second.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

36. “Models are clearly trying to be part of the solution and they ultimately deliver what we think are pretty interesting risk adjusted results.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

37. “Decade We've not owned hydrocarbon businesses because we don't think they're priced properly. They haven't really priced the fact of climate change and we think they have a significant stranded asset risk. And so we just don't think that that's, we have some views on whether it's ethically a good idea, but our decision to not invest in hydrocarbons was purely economic. We think they're not great businesses. Now, the businesses that we have enjoyed investing in are healthcare businesses that are really, I guess the expression would be picks and shovels, basically businesses that are providing services or sort of unique capabilities to the healthcare industry. Same for technology, same often for the industrial businesses, the consumer businesses we've owned over the years. Now, that's not always true. We've owned Microsoft, for example. We've owned some very large businesses. We tend to own some large businesses because we think they have robust business.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

38. “Oftentimes people have thought, well, sustainable investors generation, all you're doing, you're excluding industries and your negative screening. And we've never done that. We've always actually been positively defining what are the types of businesses we want to own. And that is a huge advantage that we have relative to a number of organizations. We're concentrated. I know many people think concentrated is 20 to 25 stocks. We're sort of 40 to 50 stocks. And I can go into why we think that that's a better approach. But anyway, we're concentrated. We don't have to own anything. We can own what we want. We're bottoms up stock pickers. And so we're trying to find businesses that we think will be robust and resilient over a period of time. Now, there are industries that will add no value to or that we think are not particularly robust over time. So for example, we have not owned energy businesses for decades.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

39. “By far the most important decision at generation. That's where all the research goes to have the debate around what companies go on our focus list. But it's driven by what are the businesses that we want to own given the drivers of change that we see in economies.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

40. “To a more sustainable form of capitalism's sustainable economies. And so we began to do a series of what we call industry roadmaps, where we would do deep dive analyses of different industries to try to figure out whether they would be long-term robust industries as we evolve to a net zero economy. And we developed a series of hypotheses about industries. And then from that point, we said, okay, we like technology, although we look at technology in many different ways or certain types of healthcare businesses. Let's then drill into what are the best businesses. in those industries and develop ultimately what we call our focus list a list of it's now i think about 125 companies that we're actively following and researching that subject to price we're prepared to invest in and it's that list that is”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

41. “When you started our firm, we, of course, had a clean sheet of paper and we were able to invest anywhere. And as I mentioned in the beginning, we spent really two years learning to work together and actually doing the work. And so what we said to ourselves is, okay, let's first understand what is the context of business, what are the drivers of change. We began to think about the sustainability challenges that we've talked about ranging from climate change to pandemics to challenges of inequality, poverty, and did a lot of work around those broader issues and continue to do a lot of work around those sorts of issues on a sort of a macro basis. And then we said, okay, given our thinking around the drivers of change, what are the types of companies? What are the types of industries that we want to own given a”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

42. “An ESG in the capital markets. We won't be able to do that unless we deliver outstanding investment results. And so it ties together. So being mission driven, you might say, well, then they're not serious investors. Well, actually, if we cannot deliver significant inconsistent, strong investment results, we can do all the advocacy we want, but no one will listen because it'll be uninspiring. And so this business model is self-reinforcing and I think has helped us build a really robust business over the course of the last 15 years. But it's more than just these guys got in early to sustainability. We tried very hard to innovate on not only sustainability, but how you build a firm, how you think about clients, and how you think about purpose.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

43. “That would be bad luck for us. So client alignment was a critical part of how we founded the firm. And then lastly, we always knew that mission mattered, that culture mattered. And so we wanted to develop an organization that had a sense of purpose from the very beginning. So generation is a commercial business for sure, but it's also a mission driven organization. 5% of our profits are allocated to the Generation Foundation. Advocacy is critical to why we exist advocating for sustainable, investing sustainable capitalism. And it's the combination of mission or B-Corp, the combination of mission and a drive to be excellent that I think creates a really unique business model. What's I think fun about what we do and critical is that it's self-reinforcing. We're mission driven firm. We want to promote sustainability.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

44. “Should be constrained actually. And we wanted to ensure that our fee structures were very aligned with clients. We knew that oftentimes asset managers would prioritize growth of assets under management versus limiting their assets under management. And so what we did is we developed an economic model that was based on a three-year rolling performance fee that would really ensure that every decision we took would be around optimizing for alpha as opposed to assets under management. And so very specifically, since we founded the firm in 2004, almost to the penny, every dollar that we've earned in performance fee has been our profit. We've not had profits based on assets under management. It was deliberately designed so that if our clients did well, we would do well. If our clients didn't do well, then”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

45. “Build a really interesting firm. And having had the opportunity to run a pretty big asset management firm, we kind of knew what we wanted to be. And so we were very deliberate to develop a focused boutique partnership. We wanted to be mission driven. The culture was important. We are a research driven firm, everybody on the investment side does research, including Mark and McGills, the co-chief investment officers. And we believe very strongly in Kai conviction concentrated portfolios. We also wanted to take a new approach to clients.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

46. “Interesting as I was thinking about the opportunity to speak with you today, I realized first most folks think about generation as a firm that was established to promote sustainability and ESG and were known as a sustainable asset management firm, a green firm, etc. And I think we have been helpful and important in helping to mainstream sustainability. And I think our critical insight was that if you integrated sustainability in ESG into a rigorous investment process, you could develop differentiated insights and that that was an investment framework, particularly coupled with a long-term orientation to deliver superior risk adjusted results. But we also tried to do three other things when we found in the firm in 2004 that I think are quite relevant to a lot of the subjects that you talk about on your podcast. The first is we wanted to”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

47. “Sustainability is probably people will have their own definition. And in fact, sometimes I think the big challenges that we've had in mainstreaming sustainability and ESG is that there are multiple definitions, there are multiple titles for this type of investing, socially responsible investing, responsible investing, impact investing, sustainable investing. But ultimately, what we're talking about are businesses that are run for the long term and that are trying to meet real needs of consumers and society, that we ultimately will drive to a clean, fair, healthy, safe, no-carbon society, a resilient society. We think this will ultimately be better economics, better businesses, and clearly better for the planet and for people.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

48. “Values for value, and that Ted is the most important thing I can say and reiterate is that for so long people have thought about sustainability in ESG as not serious investing, not serious business, and it's always about a trade-off about values, and you're going to ultimately have poor investment results. Well, we may have poor investment results, but the framework is superior. There's no question about that. And we've been fortunate to be at this now for 15 plus years. The track record has been, of course, we've had a fair amount of good luck along the ways, but the track record has demonstrated significant skill and confidence in this investment framework over these years.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

49. “That sustainability is a current and future driver of economies, again, sustainability broadly defined to include issues like climate, the environment, biodiversity, health, poverty, social justice, water challenges, et cetera, et cetera. And then thirdly, environmental and social governance factors were tools integrated into a traditional investment process to help us understand the quality of the business and the quality of management, what a company does and how a company does it. And we've always felt that this investment framework, and this is true for how we manage our public equities, our private equity, it's been about understanding or developing differentiated insights to deploy capital with the objective of delivering significant and superior risk adjusted investment results. We have never thought about this as trading value.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source

50. “Well, it was a two year journey. The truth is, we started talking about it in September, October of 2003, and we took third-party money in October of 2005. And along the way, we spent many hours, the seven founders, and then ultimately there were 16 of us who established the firm. Interestingly, a third of the 12 or 16 people came from sustainability backgrounds, and the other two-thirds came from traditional investing backgrounds. And we felt that this would be the right mix to develop the insights that we thought were going to be important to manage capital as we went forward. And we had a philosophy that really a framework that we've kept to from the very beginning. We've obviously developed it, continued to learn from it, but the philosophy is based on three premises. The first, long-term investing is best practice.”

    2020-06-22 · Capital Allocators · Sustainable Investing 5: David Blood - Pioneering a Generation (Capital Allocators, EP.143) · IDENTIFIED FROM THE TRANSCRIPT · source