From Our Briefings Newsletter

Published on19 NOV 2018

The article below is from our BRIEFINGS newsletter of 19 November 2018:

Briefly . . . on Sustainable Finance, Innovation and Diversity at Goldman Sachs  

At Goldman Sachs’ Sustainable Finance Innovation Forum last week, CEO David Solomon spoke with Kyung-Ah Park, head of the firm’s Environmental Markets Group, about innovation, diversity and the future of sustainable finance at Goldman Sachs. At the event, which was attended by some 400 companies, investors, public sector and other representatives, Solomon shared his perspectives on how sustainability is core to the firm’s strategy and delivering long-term sustainable returns for shareholders.

Kyung-Ah Park: What does leadership and sustainability mean for Goldman Sachs?

David Solomon: Goldman Sachs will be celebrating its 150th anniversary next year. There aren’t a lot of companies that make it 150 years, let alone under the same name. So as CEO, I’m very focused on how to position our firm and ensure leadership for the next 150 years.  You have to think about what matters not only in the short- and medium-term, but over the long-term -- certainly for our company and our clients, but also for our people, our community and our environment. Integrating sustainability across our businesses enables us, over the long-term, to deliver sustainable outstanding returns for our shareholders.

Given the nature of our global platform and role in the formation of capital for clients, Goldman Sachs is in a position to have a positive impact.  For example, in 2005, we decided to invest $1 billion in clean energy. In 2015, we said we could do more, both in investing and financing in clean energy, and pledged $150 billion by 2025. Today, we’re about halfway to that goal. In our Investment Management Division, ESG and impact investing is growing very quickly. Today, we have about $15 billion in dedicated ESG investments and another $75 billion with an ESG overlay. If you’re managing capital and assets, that capability is hugely important and we’re focused on leading on that front. 

KAP: Can you talk to us about the role of innovation at Goldman Sachs?

DMS: One of the reasons that Goldman Sachs has succeeded for 150 years is that it is filled with entrepreneurs and people who have been able to adapt with the changing times. Culturally, innovation and entrepreneurship are extremely important for us in that they allow the organization to continue to move forward.

We also sit at a place where we can allocate capital to people who epitomize the innovation economy. If you look at the US, for example, the spirit of entrepreneurship and innovation that is rooted here makes our economy much more sustainable and we can help facilitate that through capital. All businesses today are using technology in some way – whether it’s to change the delivery of products, to connect with clients and customers, or to enable people to have better access to information and resources. Of the people, technology and capital that make up Goldman Sachs, capital is the most commoditized. What ties this all together – and enables us to continue to innovate and allocate capital to drive sustainable progress – is having differentiated people and differentiated technology.

KAP: Creating a diverse and inclusive environment has been one of your key priorities. How is the firm tackling that challenge and also addressing the gender gap?

DMS: Gender diversity, and diversity more broadly, is an absolute imperative for Goldman Sachs and society more broadly. We know that an inclusive, diverse workforce is hugely important to our people, especially the 70% of our workforce who are millennials, and to attracting the best people. And progress has been too slow, so it’s time to make more progress and move more quickly. I’m a believer in practical solutions and we’re starting to see some progress. For example, we hire upwards of 3,000 people out of school every year to start at the firm. Just a few years ago, that hiring ratio tilted about 60% men and 40% women. Since the attrition rate of men and women leaving the firm is about the same across all levels – contrary to the misconception that women leave the firm more quickly – over time we’d see more representation of men at more senior levels, with all things remaining constant. But that doesn’t have to be the case. About two years ago, we made a conscious effort to make more meaningful progress on gender diversity in our campus hiring efforts and within one year, we’ve moved to 44% women globally.  The goal is to be at 50% by 2021. That will change the way the whole organization feels in several years and enable us to get to gender parity.