Goldman Sachs to Encourage Solutions to Environmental Issues

Link: Goldman to Encourage Solutions to Environmental Issues – New York Times.

The Goldman Sachs Group investment banking firm has announced a policy that details how its 24,000 employees – be they bankers, analysts or purchasing agents – should promote activities that protect forests and guard against climate change.

Goldman, which counts paper companies, refiners and car companies among its clients, stopped short of saying it would reject clients with questionable environmental practices. Instead, it said it would "encourage" clients in "environmentally sensitive" areas to use "appropriate safeguards."

It committed itself to investing $1 billion in projects that generate energy from sources other than oil and gas. And it strongly endorsed stringent federal regulation.

Goldman said it would establish a Center for Environmental Markets to study how the free-market system can solve environmental problems. Henry M. Paulson Jr., Goldman’s chairman, said the center – which will cost $5 million to set up and will be operating within six months – would help shape public policy.

"We don’t have a lot more time to deal with climate change," said Mr. Paulson, an outspoken environmentalist who is also chairman of the Nature Conservancy. "We need the right balance between regulation and market-based approaches."

Goldman is not the first financial services firm to adopt an environmental policy. In response to a 2003 campaign led by the Rainforest Action Network, more than 30 commercial banks signed the Equator Principles, which call for them to assess environmental risk before financing a project.

This year, J. P. Morgan Chase set out strict environmental dos and don’ts for each part of its business. And Merrill Lynch now includes environmental issues in the due-diligence checklist its bankers use before underwriting stock issues.

But environmental advocates say that the Goldman policy keeps going where others leave off.

"They are spending intellectual capital and energy on finding market-based solutions to environmental problems," said Michelle Chan-Fishel, program manager for green investments at Friends of the Earth.

Jonathan Lash, president of the World Resources Institute, was more blunt. "Goldman has given us things to measure them by," he said.

via Anita Sharpe