Year One Progress and New Initiatives
by David Solomon, Goldman Sachs Chairman and CEO
Just over a year ago, we developed a framework to put climate transition and inclusive growth at the forefront of our work with clients. And to demonstrate the depth of our commitment, we announced that we would target $750 billion in financing, investing, and advisory activity to nine areas focused on these two priorities by 2030.
We took this step because we saw that climate transition and inclusive growth were increasingly central issues for markets and economies.
And now that we are one year in, I thought it was appropriate to update you on where we are. In the past year, we reached $156 billion of our total, including $93 billion dedicated to climate transition. The fact that we surpassed a fifth of our goal in a single year demonstrates that sustainable finance has already become a core offering from Goldman Sachs – and the demand among our clients shows no signs of slowing down.
Soon after we announced our ten-year target, we created a new team, the Sustainable Finance Group, to coordinate our sustainability effort across the firm. Shortly thereafter, we launched dedicated sustainability councils within all of our businesses, each led by a senior leader within the firm, to integrate sustainable solutions into our work with clients. In February 2021, we deepened our approach, issuing Goldman Sachs’s first-ever sustainability bond, which funds commercial activity tied to our $750 billion commitment.
Now, as a result of those efforts, we offer clients an ever-widening range of commercial solutions. To assist companies as they make progress toward their emissions goals, we’ve developed new financing tools that are linked to their progress, like bonds linked to key performance indicators. To help institutions like pensions and endowments understand the climate impact of their decisions and empower them to take actions to decarbonize their portfolio, we’re preparing to add carbon accounting of client portfolios to our investing application, Marquee. And, we’ve incorporated a low-carbon tilt into all of our active quantitative equity funds to help clients manage exposure to climate transition risk.
We’re already seeing an impact of this commercial imperative. We’ve helped to significantly expand renewable-energy capacity around the world. We have built one of the largest commercial and industrial solar businesses through our Renewable Power Group, which owns over 2 gigawatts of renewable-energy capacity in the U.S., and we have been a long-standing investor in ReNew Power, one of the largest renewable energy developers and operators in India, with over 5 gigawatts of operational capacity and nearly 5 additional gigawatts under development. We’ve also channeled capital to innovative businesses looking to grow. For instance, over the last 2 years, we have provided over $1.6 billion in equity financing to support the construction of a lithium-ion battery factory by Swedish manufacturer Northvolt AB.
Still, the challenge of climate change is massive; it cannot be addressed by one company alone. That is why we have long advocated for the United States to rejoin the Paris Agreement and are committed to delivering on its ambitious goals, including by aligning our financing activities with a net zero by 2050 pathway. We are committed to working with our clients, our industry peers, and the public sector to make this commitment a reality. And while long-term aspirations are important, business leaders must not lose sight of what we can do in the here and now to accelerate climate transition. For our part, in addition to driving capital to climate solutions and accelerating the climate transition of our clients, we’re advancing on three separate fronts.
First, we’re working to develop more comprehensive climate data and to promote more thorough disclosure.
We’ve made a concerted effort to make public our own progress in cutting our greenhouse-gas emissions. We were the first U.S. bank to disclose under the Sustainability Accounting Standards Board (SASB) standards, and last year, we issued our inaugural Taskforce on Climate-related Financial Disclosure (TCFD) report, which explained how the management and oversight of climate change is integrated into our business.
After hearing from clients that they lack the tools to track their own progress, we’ve redoubled our efforts to better equip them. We’ve joined the OS-Climate Initiative as its founding U.S. bank member. As part of this broad coalition, we, alongside partners including Amazon, Microsoft, Allianz, and the U.N. Net Zero Asset Owner Alliance will work to develop an open-source data commons and net-zero alignment tools that can be used across industries.
In return, we have begun asking our clients to disclose more of their climate data. We now encourage companies we invest in to adopt the SASB and TCFD frameworks, and we are aspiring to integrate both into our investment process in our Asset Management business.
Second, on top of the long-term goals we’ve set, we’re developing near-term goals to further speed up progress. We’ve joined the U.N. Principles for Responsible Banking to make sure our strategy is in line with the Paris Agreement goals. As part of this commitment, we will conduct an impact analysis of our firm’s activities and enhance our own emissions disclosures. And using this forum to collaborate with our industry peers, we will also set interim business-related climate targets by the end of 2021. We are also advancing the proactive management of our operations—in 2015, we became the first of our peers in the financial-services sector to reach carbon neutrality in our operations and business travel. Today, we are expanding our operational carbon commitment to include our supply chain, targeting net zero carbon emissions by 2030.
Third, we continue to weave climate-risk considerations into how we do our business. Later this year, we will issue our second annual TCFD report, in which we will lay out in detail how we’re taking climate-risk considerations into account both in our business practices and our business selection.
So though we’ve made progress on our sustainable finance goals, one thing is clear: to make even further progress, collaboration is vital, especially in the short term. So we encourage business leaders from all industries to join these collective efforts. After all, it’s the gains we make in the short term that will make our success in the long term possible.