Goldman Sachs to finance, invest $150bn in clean energy

Goldman Sachs, the largest US investment bank, will finance and invest $150bn in clean energy by 2025, while aiming to use 100% renewable power to meet its global electricity needs by the end of this decade.

As part of an updated company Environmental Policy Framework (EPF), Goldman says it will also become carbon neutral across its operations and business travel at the end of this year and target $2bn in “green investments” in its own operations by 2020.

The bank will also decline any financing transaction “that directly supports the development of new coal fired power generation in the U.S. and other developed economies unless it has carbon capture and storage or equivalent carbon emissions reduction technology.”

The EPF Overview states that the bank acknowledges the scientific consensus, led by the Intergovernmental Panel on Climate Change, that climate change is a reality and that human activities are responsible for increasing concentrations of greenhouse gases in the earth’s atmosphere.

“We believe that climate change is one of the most significant environmental challenges of the 21st century and is linked to other important issues, including economic growth and development, poverty alleviation, access to clean water, food security and adequate energy supplies,” the document states.

Delaying action on climate change will be costly for our natural environment, to humans and to the economy, and we believe that urgent action by government, business, consumers and civil society is necessary to curb greenhouse gas emissions,” it adds.

Goldman last updated its corporate environmental policy framework in 2012 when it set a target to finance and invest $40bn in capital for clean energy globally over the following decade. Less than four years into that effort, it says it has already mobilized $37bn.

The latest framework also includes initiatives to facilitate capital for water, climate risk solutions and other environmental opportunities, and to develop innovative applications for green bonds, as well as the bank’s approach to environmental and social risk management. 

“Environmental issues have become increasingly relevant to our clients and our investors, and have become core to our business,” says Kyung-Ah Park, head of Goldman Sachs Environmental Markets. “

Goldman claims several innovations in green finance including the first rated solar securitization, the first US yieldco listing, the first century green bond and the first green market securitization.

The world’s most powerful and controversial financial institution also sees clean energy as one of the biggest profit opportunities in decades.

Much of Goldman’s attentions will be focused on large growth markets such as Brazil, China, India and Mexico — developing nations whose economies each represent at least 1% of global GDP — and industrial ones such as Japan and South Korea. These countries have rapidly growing populations, rising per-capita energy consumption, and pressing environmental risk and health issues tied to over-reliance on fossil fuels, and/or energy shortages that are getting worse.

The US will also see investment, as Goldman expects it to continue to play a crucial role in helping the industry scale up, due to the size of its market, its entrepreneurial and technological leadership, and vibrant venture culture.