Reporter's Notebook

Al Gore's Plan to Save Capitalism: Does It Make Sense?
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Below are Atlantic notes, from James Fallows and others, in response to his November, 2015 article on Al Gore’s campaign to make capitalism more sustainable—and profitable.
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Did Al Gore 'Invent' Sustainable Capitalism?

An “it’s about time!” welcome to Al Gore and David Blood, on the Resilient Investor site.

In early responses to my article in the current issue about the surprisingly profitable track record of Al Gore’s Generation Investment Management firm, Felix Salmon and other commentators have given variants of what I’m calling the “$20 bill on the sidewalk” argument. The $20 argument goes: if an economics professor sees some money on the sidewalk, he thinks, That can’t really be a $20 bill, because if it were someone would already have picked it up. The analogue when viewing sustainable investment would be, This approach can’t really be so profitable, because if it were other people would already be doing it.

For this installment, a sample of responses that say: As a matter of fact, it is that profitable! And lots of other people have been doing it. And, even if Al Gore and David Blood didn’t “invent” this approach, perhaps their prominence and their recent success will help it become better known.

First and most extensive is a long report by Jim Cummings at the Resilient Investor site, which essentially says: Welcome aboard, Mr. Gore! And it’s about time! It’s worth reading in detail, but here is a sample:

Convincing quotes from [various experts I cite in the article] all seem to agree [that Generation’s profitability] flies in the face of conventional wisdom.  Where have they been?  

When we wrote Investing With Your Values in 1999 (published by Bloomberg, not exactly a fringe outfit), there was already a solid track record of clear parity and frequently out-performance by SRI funds; our own Jack Brill had completed a 5-year New York Times mock-management quarterly feature, running a strong second with the only SRI portfolio.  Indeed, the co-authors of our new book were in the audience at the annual SRI Conference in 2005 when David Blood, who had recently launched Generation Investment Management with Gore, told the gathered crowd, “You were right. You’ve been right for 25 years. Incorporating social, environmental, and corporate governance considerations into the stock selection process adds value.”  

We were happy to welcome Blood to the club in 2005, and we’re surely excited that Generation’s first ten years of results can be added to the steady stream of mainstream reports confirming and expanding on the message that socially and environmentally responsible firms outperform their values-neutral peers.

Following my article on the implications of the so-far-very-profitable “sustainable capitalism” approach of Al Gore’s Generation Investment firm in London, and the previous call-and-response you’ll see further down on this page, some more reader response.

First, from a veteran of the U.S. high tech industry who is now a professor in Israel:

Like Felix Salmon, I have an active BS detector that begins to buzz when the success of what is essentially a technical advance (usually something that I encounter in a popular treatment of an engineering breakthrough, like recent stories on i-phone sized cameras with 16 different lenses and imaging chips) is defended by one number and a lot of good intentions. 

The Institutional Investor article which you link to leaves me feeling much better about the likelihood that Generation is really doing well for fundamentally sound reasons, and will have a broader impact.  It does make the case that others are following similar directions.   

Report from Generation Foundation on “sustainable capitalism”

The new issue has my piece on the Generation Investment Management firm co-founded more than a decade ago by Al Gore, and why Gore thinks its profitable track record can shift capitalist incentives in a pro-environmental direction. I hope you’ll read it, because I think the arguments Gore and colleagues are making bear directly on the “saving capitalism from itself” debate that has been running for years in Europe and which the Democratic candidates waded into during this week’s debate.

Yesterday I posted a long, largely skeptical response by the financial writer Felix Salmon, of Fusion. You’ll see it lower down on this page. Salmon had once looked into Generation himself, and he had questions about both the details of its operation and the significance of its example.

My purpose in this story is different from that of some others I’ve written. For instance, in the big Chickenhawk Nation piece I did in January, the narrative structure boiled down to: I’ve been wrestling with this topic for years, I’ve been reporting on it in recently, and now I have a line of argument. So sit back and let me see if I can convince you. Some other long stories, on fields I’ve dealt with for decades, follow that same structure (for instance this and this and this and this or this.)

Many other stories are in more straightforwardly reportorial mode. (The Atlantic is one of a handful of publications comfortable with both.)

The new issue (subscribe!) has my article on Generation Investment Management, the London-based financial firm Al Gore co-founded more than a decade ago. Generation has been very profitable, and Gore and his colleagues contend that its success should draw attention toward the rewards of environmentally conscious “sustainable capitalism.”

From the current issue

Felix Salmon, the prominent financial writer and senior editor for Fusion, has some thoughts about this piece, what Al Gore and his colleagues are up to, and what it all does or does not mean. As will become obvious, there are parts of Salmon’s letter I like and agree with more than other parts, and I think that many of his complaints boil down to this not being a different kind of article for a different kind of readership in a different, more financial-insidery kind of newspaper or magazine. Or by a different writer! Some other parts, I think, are versions of the “$20 bill on the sidewalk” outlook I mention in the article: the Gore/Generation practices can’t really be that successful, because if they were everyone would already have adopted them. (“That can’t be a $20 bill on the sidewalk, because if it were someone would already have picked it up.”)

But there are also some good fundamental questions he asks about the implications of this model, which I’m resisting answer piecemeal and will begin responding to tomorrow. For now, I’m grateful to Salmon for letting me quote it in full and kick off the discussion.

Felix Salmon writes:

This is a fascinating and yet frustrating article, at least for me. It’s by far the most in-depth thing that has ever been written about Generation, but I feel like it doesn’t really answer any of the questions I had about the company, most of which arose when I wrote this piece about why more investors don’t divest from fossil fuels. The Generation view would have involved me putting something in there about how solar is a much better investment than coal, or some such, but because Generation is so secretive about its results, I couldn’t really do that.

So anyway, here are my questions:

From our new issue: Al Gore and David Blood, two of the founders of Generation Investment Management, who believe that their firm can help engineer a paradigm shift in modern capitalism. Don’t laugh. (Photo for the Atlantic by Christopher Griffin)

Two weeks ago, I mentioned that I was interviewing Al Gore about a decade-long project he had undertaken that had largely escaped public notice.

My article about that project, an audacious attempt to show that a “sustainably” minded investment strategy could make more money than one simply focused on profit-maximization whatever the side effects, is now coming out in our November issue and has just gone online. You can read it here: “The Planet-Saving, Capitalism-Subverting, Surprisingly Lucrative Investment Secrets of Al Gore.” (Of course, Subscribe!)

In every issue and most every article, we try to tell you about ideas and developments you might not have come across before. As a reporter, I like the job best, and feel most alive, when being exposed to some new-to-me culture or organization or approach to life. A Chinese factory, a software startup, a genomics-research lab, an aerospace design center, a Border Patrol unit—these are the sorts of places that I’ve had the luck to spend time inside, begin learning about, and try to describe in the magazine. The structure of a great many of our Atlantic stories, and nearly all of mine, then boils down to: “Here’s a question I had, here’s how I looked for answers, and here’s what I found.” That’s what I’ve done in this case, and I think the results contain genuine news.