It is, for now, mostly unproven promise: “We take seriously our responsibility for environmental stewardship and believe that as a leading global financial institution we should play a constructive role in helping to address the challenges facing the environment.”
But even the promise is a big deal–mostly because the statement comes from Goldman Sachs Group Inc., arguably the most prestigious investment bank in the world. The environmental policy recently adopted by Goldman, essentially a green handbook for its 21,928 employees, is unusually progressive and aggressive.
While more than 30 commercial banks have signed on to the Equator Principles, a set of benchmarks for calculating environmental and social risks of investments, Goldman’s framework goes further. It calls for world governments to tighten restrictions on greenhouse-gas emissions, commits to investing $1 billion in renewable energy, and proposes a Center for Environmental Markets, a research partnership that will explore how the free-market system can solve environmental problems.
“This policy helps to disintegrate the illusion of the wall between economy and environmental integrity,” says Ilyse Hogue, global finance campaign director for Rainforest Action Network, which advised Goldman on the policy. “If we want a vibrant economic future, we need to deal with climate change. Goldman is the first investment bank to really grapple with that issue.”
For now, most of Goldman’s ambitions remain unrealized. The research center, for one, is still in the startup phase. But its policy essentially codifies what the investment bank had already been doing over the past two years. Consider its recent run of high-profile, environmentally conscious behavior: After finding itself in possession of a 680,000-acre tract of wilderness in Tierra del Fuego through a routine loan acquisition, Goldman donated the land as a nature preserve for the people of Chile; and it spent an undisclosed sum to buy a wind-farm company based in Texas, adding to its small but growing investments in renewable energy.
Lucas Van Praag, managing director and global head of corporate communications at Goldman, says the aggressive policy is good for business; among other things, renewable energy sources are attractive investments right now. And the green image could be a boon for recruitment. “We aim to attract the best and brightest, and research shows that college kids today tend to be much more sensitized to corporate behavior with respect to citizenship,” Van Praag says.
The larger question is how Goldman’s influence could affect the behavior of other investment banks, as well as public policy, Hogue says. Activists hope the landmark commitments will set a precedent–and that others will embrace the stark language acknowledging that “a healthy environment is necessary for the well-being of society, our people, and our business” and recognizing the “scientific consensus… that climate change is a reality.” With that, sustainability may become Wall Street’s next big deal.