Goldman Sachs Will Fund Sustainability
The world is becoming far more sustainable. Renewable energy is in and fossil fuels are on the way out. Green tech isn’t just for dirty hippies anymore, it has become completely mainstream and that is good for the earth and for business too.
The Goldman Sachs Group, a leading global investment banking firm is showing its commitment to sustainability by vowing to spend $750 billion on climate transition projects that fall under nine key themes including sustainable transportation, education and food production, while at the same time, curbing fossil fuel lending over the next decade.
The company has overhauled its environmental policies to be a firmwide mandate to focus on climate transition saying, “Today, sustainable finance is no longer on the sidelines, but increasingly core to a company’s business.”
One of the key tenets of Goldman Sachs’ new environmental policy framework is the belief that a healthy climate – drinkable water, clean oceans and air, forests, and agro-systems – is necessary for the well-being of society, for business, and for a strong economy.
The new policy stresses that the company takes their responsibility seriously and that they will support new technology and innovation as a way to solve environmental challenges by accelerating the transition to a low-carbon society and a sustainable future.
“There is not only an urgent need to act, but also a powerful business and investing case to do so,” Goldman Sachs CEO David Solomon wrote in an Op-ed the Financial Times. “Focusing on these specific goals gives us a set of metrics — such as the amount of carbon reduction and the number of people served — that we can track over time both for the companies and for ourselves,” he added.
Solomon also said that companies do not have the luxury of treating climate related initiative as fringe issues because delaying action will affect people, countries and businesses globally.
Besides funding environmental ventures, Goldman Sachs will no longer fund any project that directly supports Arctic oil exploration or development or new coal-fired plants unless it includes carbon capture or other emission cutting tech according to CNN.
The bank said that it would work with its mining clients to help them to diversify and cut emissions and that it would phase out working with companies that do not have transition plans. But that the company will not completely abandon fossil fuel clients.
“The world will continue to produce and use fossil-based fuels, airplanes, cars and industrial goods, and Goldman Sachs will continue to support clients in transactions that are important to economic activity,” Solomon wrote in the Op-ed.
“To give us the best chance of combating climate change, governments must put a price on the cost of carbon, whether through a cap and trade system, a carbon tax or other means. The resulting incentives will channel capital to low carbon solutions and drive innovation. Combining public policy, technology and capital is a must, not a choice,” he concluded.
Goldman Sachs’ new framework was announced just as the UN Climate Control conference #COP25 was drawing to a close. The conference ended with no real progress being made by the countries that attended. UN secretary general Antonia Guterres tweeted his disappointment.
If governments don’t commit to action to save the planet, it will take the efforts of companies like Goldman Sachs to use a financial carrot and stick to make the hard changes that are needed. If other global investment firms follow suit there can be real change.
