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Goldman Sachs first investment bank to adopt comprehensive environmental policy




Goldman Sachs is first investment bank to adopt comprehensive environmental policy

Goldman Sachs first investment bank to adopt comprehensive environmental policy
Modified RAN release
November 22, 2005

The Rainforest Action Network (RAN) today issued a release commending Goldman Sachs for becoming the first global investment bank to adopt a comprehensive environmental policy. The policy acknowledges the scientific consensus on climate change and calls for urgent action by public policy makers and federal regulators to reduce greenhouse gas emissions.

The policy is also the first in the financial sector to acknowledge the degradation of global “ecosystems services” addressed in the United Nations’ Millennium Ecosystem Assessment (MA). Ecosystem services include the provision of water and food, control of pests and pathogens, renewal of fertile soil, control of floods, and more. The MA’s findings that two-thirds of these services are being degraded present real challenges as well as opportunities for business.

“The emphasis of the Goldman Sachs environmental policy on climate change, biodiversity, and forests should be commended, but what is perhaps most striking is that this is the first-ever policy among financial institutions to include goals related to the conservation of ‘ecosystem services’; that is, the benefits we obtain from ecosystems such as clean water, flood control, pest regulation, and disease regulation,” said Dr. Walter Reid, a professor at the Stanford Institute for the Environment and former Director of the Millennium Ecosystem Assessment. “The UN-sponsored Millennium Ecosystem Assessment, released earlier this year, emphasized the perilous state of many of these ‘life support’ services. By steering investments in ways that avoid harm to ecosystem service and by helping to create new markets that would promote the conservation of these services, Goldman Sach’s policy will help to align the power of markets with the conservation of these services.”

In another industry precedent, Goldman Sachs will establish and fund a Center for Environmental Markets in partnership with academia and civil society. The center will engage in research to develop public policy options for establishing markets around climate change, biodiversity conversation and ecosystem services. Recognizing that climate change cannot successfully be addressed through voluntary action alone, the firm has also committed to promote regulatory solutions for reducing greenhouse gas emissions.

As a major owner and operator of fossil fuel-fired power plants in the United States, Goldman Sachs has agreed to publicly report and work to reduce greenhouse gas emissions from its plants while also supporting the need for a national policy to limit greenhouse gas emissions. The policy states that its investment businesses will “take the lead in identifying investment opportunities in renewable energy” and that it will “be a leading U.S. wind energy developer and generator.”

According to Ross Gelbspan, author of The Heat is On (1997) and Boiling Point (2004), “Goldman Sachs is taking a courageous step by acknowledging what many policy experts have long understood. Markets alone cannot satisfy nature’s demand for a rapid global switch to clean energy. Companies need the governments of the world to help regulate that transition to ensure that no individual company loses market share or incurs any competitive disadvantage. Given that reality, today’s announcement by Goldman Sachs is a significant breakthrough in laying the groundwork for an energy transition that will, hopefully, offset the most disruptive impacts of intensifying climate change.”

Goldman Sachs further promises to promote green building standards such as LEED Gold and Forest Stewardship Council (FSC) certification and sustainable forests with a stated preference for FSC.

“Forest Stewardship Council has developed the world’s leading system for forest management certification based on rigorous standards, third-party audits, and a transparent and inclusive process,” says Roger C. Dower, president of the Forest Stewardship Council in the United States. “We are extremely pleased that Rainforest Action Network recognizes the value of the FSC system as a tool in helping to accomplish their mission of protecting the rainforest through marketplace transformation. As a result of their work with RAN, Goldman Sachs can now offer assurance to their clients that their investments will support only sound and verifiable forest management practices, with the support of the world’s leading environmental organizations behind them. After receiving the first annual Designing & Building with FSC Award earlier this month for their inclusion of FSC-certified wood products in their new building in Jersey City, FSC is very excited that Goldman Sachs has furthered their commitment to forest conservation with the implementation of this new policy.”

Similar to recent policies from Citigroup, Bank of America and JPMorgan Chase, the Goldman Sachs’ commitment includes explicit prohibitions against financing or investing industrial activity in ecological no-go zones and recognizes the rights of indigenous peoples to free, prior informed consultation.

More details on the RAN/Goldman Sachs agreement can be found at www.ran.org.



This article is based on modified press materials provided by the Rainforest Action Network.