The challenges we face are rooted in history, but the solutions we need will come from innovation. Technology is often a key enabler, but what’s equally critical are new ideas, new business models, and new ways of looking at the world. The same radical thinking that has created entire new industries and markets is required to chart a path to new ways we can spread prosperity, reduce our impact on the planet, and bring greater care and assistance to those in need.
New World, New Models
Property accounts for 41% of global energy use, and building and construction for 39% of global carbon emissions – more than any other sector.
Alongside the social impacts of housing and development – which over history have cemented barriers to access for the most marginalized communities – innovation in real estate that pairs climate considerations with social and racial inclusion is critical to realizing a just transition.
Besides the obvious moral and environmental imperatives, there are also commercial benefits to “green” buildings in particular. Investors are reallocating to sustainable strategies; tenants, including some of the world’s largest corporations, are seeking to lower their carbon footprint; and regulatory pressure to prioritize the environment and local communities—particularly in major global cities—is increasing.
Our work across the firm shows the breadth of innovation—and opportunity—in play to reimagine homes, buildings, and cities for the future:
- Oikos is Germany’s second-largest provider of high-quality prefabricated homes. We acquired a majority stake in the company in May 2021, and helped the company identify initiatives that align with Paris Agreement goals. These include phasing out diesel-powered production vehicles, investing in new heating systems, installing solar systems in its plants, and purchasing timber from responsibly managed forests.
- BlocPower is a Black-led, privately held company that partners with utility companies and governments to identify, finance, and upgrade building energy systems in urban areas. We provided a loan to BlocPower in 2021 to finance the acquisition and installation of electric heating and cooling systems across multi-family buildings in New York City, predominantly focused on low- to middle-income areas in the Bronx.
- The California Statewide Communities Development Authority (CSCDA) Community Improvement Authority is a public-private partnership program that uses governmental ownership and private-sector asset management to create and sustain high-quality, affordable housing for essential workers. In 12 separate transactions in 2021, we raised more than $2.7 billion in social bond issuance—the first-ever transactions in the sector. Each of the 12 transactions were ultimately designated social bonds pursuant to a social bond framework, which the Goldman Sachs team crafted with the issuer.
- Sustainable Living Innovations’ 303 Battery is a 15-story, 112-unit mixed-use, mixed-income building that will be located in Belltown, one of the most densely populated neighborhoods in Seattle. It is expected to be the world’s most sustainable high-rise apartment block and this year, we provided a loan for the building’s construction. The loan will also allow 303 Battery to be built without government subsidies, which can be deployed to create much-needed affordable housing.
- The LA Clippers’ Intuit Dome, currently under construction, will be a Platinum LEED building once completed. We led financing for the arena in 2021. The project will fund $100 million toward social and environmental programs in the City of Inglewood, with funds for initiatives including affordable housing, first-time renters’ assistance, emergency support, and capacity building for housing-focused non-profits, as well as after-school programs and services for senior citizens.
Innovations in revenue models are particularly important in driving inclusion in areas like healthcare, where communities may not be able to pay for essential services directly.
We participated in a $160 million Series C funding round of Cityblock Health in 2021. The organization provides members with primary care, behavioral health, and other services, both virtually and in person. Cityblock’s goal is to to bring necessary transformation to Medicaid and lower-income Medicare beneficiaries, who are some of the most vulnerable and underserved populations in the country.
Equitable access to quality care is only part of the story. In the U.S., accessibility is compounded by a shortage of qualified caregivers. In 2018, we provided an investment to NextStep, a healthcare innovation company that is creating opportunities for low-wage workers and those whose jobs have been displaced by AI or automation to receive technology-enabled training, along with individualized job placement and mentorship services.