Goldman Sachs issues first sustainability bond, priced at $800m

Pictured: Jersey City

The bond will be used to support businesses and projects driving progress in nine key areas: clean energy; low-carbon transport; sustainable food and agriculture; waste management and materials; ecosystem services; accessible and innovative healthcare; accessible and affordable education; financial inclusion and community sustainability.

All finance will be allocated in line with Goldman Sachs’ own Sustainability Issuance Framework. The firm claims that the framework couples the need for rapid decarbonisation with the need for inclusive growth. Sustainalytics has acted as the second-party opinion provider for the Framework.

Goldman Sachs has said that it will report on the allocation of the proceeds every year, including details on expected and realised financial, environmental and social impacts. The bond has a five-year term and will pay out every six months.

“The launch of our first sustainability bond shows that investors can drive innovative solutions by using our firm’s extensive platform and resources,” Goldman Sachs’ chairman and chief executive David Solomon said. “We’ve said building a low-carbon, inclusive economy is a business imperative, and now we’re demonstrating our commitment by using the same financial toolkit we recommend to our clients.”

In an interview with Bloomberg, Goldman Sachs Bank USA’s chief executive officer Carey Halio revealed that the firm is planning to issue sustainability bonds every 12 to 18 months through to 2030. By this time, the firm is aiming to deploy $750bn of sustainable finance, investing and advisory activity, as part of its broader ESG strategy.

Halio told Bloomberg that this level of mobilisation will make sustainable finance a “core part” of the business’ strategy.

Last year, Goldman Sachs, was named along with other asset management firms that were accused of collectively failing to drive alignment with the Paris Agreement in their business models and policy lobbying.

A report from non-profit InfluenceMap analysed how closely the portfolios of 15 of the world’s largest finance firms aligned with the Paris Agreement’s two pathways, and the ways in which these businesses have voted in climate-related resolutions and engaged in climate-related lobbying.

Goldman Sachs was ranked in the middle of the rankings, alongside the likes of Vanguard, State Street, BlackRock, JP Morgan Chase and Morgan Stanley. InfluenceMap found that these firms are engaging the companies they invest with on climate issues, but without using climate models such as scenario analysis in line with the Paris Agreement.  

Green bonds boon

Looking at the green bonds market more broadly, one analysis from the Climate Bonds Initiative (CBI) concluded that global green bond issuance in 2020 reached a record high of $269.5bn.

Many economics experts had expected a slight downturn in issuance amid the backdrop of the recession caused by the pandemic. In the first half of the year, bonds with social sustainability requirements were faring better than “green” bonds, which typically focus purely on environmental sustainability.

Following this positive result, the CBI is forecasting that issuance could reach up to $450bn this year.

Sarah George