When Investment Banks start getting into the sustainability field you know something is going right. Marc Gunther writes on his blog about Goldman Sachs, which was named the leading investment bank in the environment area in Fortune.
Investments: Goldman, as part of its environmental policy, invested about $1.5 billion in alternative energy and clean technology. It invested in Iogen, which is developing cellulosic ethanol, Horizon Wind Energy, which it now plans to sell at a profit, Sun Edison and First Solar, which are in the solar energy biz, and Nordex, which makes wind turbines. “We were an early mover, so it was a good investment strategy,” Tercek told me.
Research: Beginning in Europe, Goldman asked its research analysts to include environmental, social and governance factors when they analyze companies or industries. Guess what? Clients liked the extra analysis. The ESG research is being extended to the U.S. now. This isn’t a big profit center for Goldman, but the client response was a sign that investors are taking environmental risks and opportunities into account when they decide where to invest their money.
Deals: This is tricky area. Goldman promised in its policy “to take the environmental impacts and practices of our clients and potential clients into consideration as we make business selection decisions.” The policy also says Goldman will encourage clients to be transparent about their environmental impact, and to do business with “appropriate safeguards” in sensitive areas. These criteria could, in theory, stand in the way of winning investment banking deals and, like all bankers, Goldman’s lust for market share.
Even with these initiatives Goldman still finances Coal. Now this is a business so it will do what is best for the company and its shareholders. However, if more and more businesses create opportunities in the sustainability sector than Goldman, Bank of America and other companies are not far behind in financing them.