Investment banking giant Goldman Sachs says its ‘GS Sustain’ environmental, social and governance (ESG) focus list programme has outperformed the MSCI All Country World Index (ACWI) by 39% in a four-and-a-half-year period to the end of last year.
GS Sustain is a global equity research approach which integrates ESG standards, which Goldman launched in June 2007.
Goldman has also announced it is expanding the programme to cover nearly 1,000 large companies globally for their industry leadership and ESG performance. It means that Goldman will now use the approach to cover more than 90% of the value of the MSCI ACWI.
Goldman said it had to collect and analyse more than 70,000 ESG data points from publicly available reports, adding it has trained more than 100 analysts in its Global Investment Research division on how to collect and incorporate ESG data into company analysis.
Goldman, whose asset management division became a signatory to the UN Principles for Responsible Investment (PRI) at the end of 2011, says it wants to expand the Sustain programme.
“In 2012, our goal is to expand GS Sustain further as it becomes increasingly integral to global investment research at Goldman Sachs,” the company says in its new Environmental, Social and Governance report.
“Our resolve to be a leader on environmental, social and governance issues permeates our culture, and is manifested in small and big ways every day,” write Chairman and CEO Lloyd Blankfein and Chief Operating Officer Gary Cohn in the foreword to the report.Goldman says all new hires in its revenue generating divisions now undergo ESG training – which amounted to 745 recruits in 2011.
The company says it recognises the value of using ESG criteria when investing for clients, saying: “We believe that a company’s governance structure and its record on environmental and social issues can be important measures of the quality of management and can affect investment performance.”
“Our resolve to be a leader on ESG issues permeates our culture” – Blankfein
The report cites the example of an engagement with an unnamed company in the basic materials sector that was seeking to raise debt capital.
Goldman identified a history of worker injuries and fatalities at the company and helped it raise capital while at the same time assisting management to improve safety.
The 44-page report confirmed the firm’s $40bn (€31.8bn) target for financing and investments in clean tech companies over the next decade.
Meanwhile, the company’s annual shareholder meeting yesterday saw the Needmor Fund’s proposal calling for a report on lobbying expenditures gain 7% support. Proposals by shareholder activists Evelyn Davis and John Harrington – on cumulative voting and executives’ stock retention – had 24% and 17% backing respectively.