Financial giant Goldman Sachs is leading the industry’s transition to net zero, a goal for which time is running out. The latest proposal was a sustainable investment fund, with which they intend to attract people who care about the environment. We tell you everything about this new option that you can include in your wallet to make it green.
The investment leader goes green: how to launch sustainable investments
In recent years, Goldman Sachs has been a key player in the sustainable investing space. The bank, for its part, introduced the integration of ESG (environmental, social and governance) principles throughout its investment universe.
This includes setting up dedicated ESG funds, forming carbon neutrality targets as well as improving the transparency of sustainability initiatives. In 2021, Goldman has committed to implementing $750 billion in sustainable finance over a ten-year period.
The bank also designated a target of net zero greenhouse gas emissions to be achieved for its financing activities, operations and supply chain by 2050. These commitments, however, have elevated the bank to the top of the provision of sustainable finance.
Now, Goldman is inviting another move in its sustainable investing structure with the launch of a new global green bond fund-ETF. The fund seeks to address this issue by providing investors with exposure to green bonds that are labeled, and this category finances environmental projects.
The new sustainable investment fund, a step towards ESG criteria
Getting to know a new sustainable investment fund that Goldman Sachs Asset Management announced recently, is managed after investments meet specific ESG requirements.
The new fund, called the Goldman Sachs Sustainable Future Fund, will primarily fund companies and projects that Goldman Sachs believes will help implement the transition to a sustainable, low-carbon future.
The Goldman Sachs Sustainable Future Fund aims to generate competitive or attractive investment returns by investing in companies across sectors such as renewable energy, sustainable transportation, education, healthcare, etc.
The fund will employ a strict ESG screening process and will use as a selective investment to score highly on key sustainability metrics. Associated with this are the guidelines issued by the federal government through new guidelines on environmental and investment issues.
$500 billion in size, the key to explaining the enormous size of this fund
The annual sum of $500 billion is projected by Goldman Sachs to be reached by the new sustainable investment fund, which is an unprecedented amount by ESG fund standards. This would be the largest pool of capital ever speculated by analysts, intended for socially responsible investments.
This fund will help reallocate a large number of shares to companies and projects that are actively involved in the mentioned areas. Contemplating this substantial pool of money with that of private investors will have a greater improving effect on the environmental well-being of the entire ecosystem.
The amount of $500 billion is a clear manifestation that the interest of institutional fund managers in ESG funds is increasing. Pension funds and endowments are adjusting upwards their nature of sustainable strategies.
The firm, being large and wealthy, speculates that it can accelerate this development and redirect more capital from the capital market into meaningful investments. If they succeed, the new mega-fund could be a game-changer for sustainable finance.
Reaching the $500 billion target would accelerate capital allocation into ESG, which in turn would force companies and asset managers to change their business strategies with an eye on sustainable growth.
As you have seen, this sustainable investment fund is designed to finance thousands of renewable campaigns and projects. The ecological transition needs, of course, capital to make it possible, and it will not only come from public organizations. Private funds will also help make it happen, and you can now participate and make money in the long term.