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Goldman Backs Al Gore’s Investment Firm in Major CO2 Impact Bet

Harvard and Microsoft also are partners in Generation’s new asset-management venture.

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The investment firm co-founded by Al Gore is teaming up with industry giants including Goldman Sachs Asset Management to create a new impact venture it says will target private markets with the greatest potential for rapid decarbonization.

Generation Investment Management LLP, which oversees $36 billion, said Wednesday that other co-investors include Microsoft Climate Innovation Fund and Harvard Management Co., which together will provide an undisclosed amount of startup capital to launch Just Climate. The goal is to make investments pegged to limiting global warming to 1.5 degrees Celsius above pre-industrial levels, and reflects Generation’s view that there needs to be a fundamental shift in capital allocation if the planet is to avoid cataclysmic overheating.

“The challenge of the climate crisis and the just transition are urgent, and they’re vast,” David Blood, senior partner and co-founder of Generation, said in an interview. “And importantly, we can see more and more that sustainability and ESG aren’t alone going to be able to address these challenges.”

Environmental, social and governance strategies were a necessary step to put financial markets on a more sustainable path, but it’s now clear ESG is failing to keep emissions and temperatures in check, said Blood, who left Goldman Sachs Group Inc.’s asset-management unit more than a decade and a half ago to start Generation with the former U.S. vice president. The United Nations estimates that without aggressive action to cut emissions, the world will warm 2.7 degrees Celsius by 2100, a level it has called “catastrophic.”