Shalini Rao talks about Generation’s $1B Sustainable Solutions Fund III and integrating sustainability into every step of the investment process
“Within our firm we don’t have ESG analysts. The same analysts who are building the models and debating the financial levers are those who are sitting around the table debating sustainability externalities. I think you need that integration to really treat sustainability with rigor and to help solve some of these gaps that you see in the market more broadly and to really move the dial on how to make capital markets more sustainable generally.”
“You hear from entrepreneurs sometimes that investors can be leeches, mere rent extractors in their creation of value. And so we think of it as incumbent on us to help drive value to the companies in which we invest.”
– Shalini Rao, Director of Growth Equity at Generation Investment Management
Generation Investment Management was founded in 2004 by Al Gore and David Blood under the belief that fully integrating sustainability into investment strategy would help deliver long-term value to investors. A few years later, Generation expanded from public equities into private equities with the launch of their Climate Solutions Fund. Now almost two decades in and with over $30B in assets under management, that initial investment philosophy has evolved very little. By staying true to their focus on sustainable, long-term value creation, Generation has consistently outperformed the market and helped drive the adoption of sustainable investing practices across the world.
Episode 64 of Money + Meaning features Shalini Rao, Director of Growth Equity at Generation Investment Management. The growth equity team closed their third Sustainable Solutions Fund in 2019 with over $1B in committed capital. The fund invests in three broad impact areas: planetary health, people health, and financial inclusion. An example of a financial inclusion investment is Gusto, a software platform that makes it easier for small businesses to provide payroll, HR, and benefits to employees, therefore improving access to benefits for the majority of the population who work for small and midsize businesses.
During the episode, Shalini talks with host, Alex Kravitz, about Generation’s use of investment roadmaps to identify systems positive outcomes (outcomes necessary to drive change in economic and social systems) and how they work back from these outcomes to find long-term, investable solutions. They also discuss several investments that Generation has made out of the Sustainable Solutions Fund III and the importance of fully integrating sustainability into the investment process.
- Read two posts by Generation Investment Management on Medium: “The world of work after the pandemic” and “Supporting Supper: how to help the restaurant industry build back better”
- Watch Shalini on Yahoo Finance: “’Most small businesses have fewer than 15 days cash buffer’ says Director of Growth Equity”
- Read the Sustainability Report for the Growth Equity team’s Sustainable Solutions Fund III
Money + Meaning is the official podcast of SOCAP. The series aims to expand the conversation around impact investing and strategies to finance and support social change while stimulating innovative and valuable new partnerships across sectors.