Just before Thanksgiving, the prestigious investment banking firm Goldman Sachs announced a broad-reaching environmental policy.
The policy contains several important pledges. Most tangibly, Goldman aims to make $1 billion available for investments in renewable energy (and this is not mere talk, as Goldman bought the wind developer Zilkha earlier in 2005). Goldman promises to take environmental considerations more seriously when considering investment opportunities, for instance refusing to invest in projects that do not comply with local environmental laws. Goldman also intends to become more active in shaping environmental public policy, including the establishment of a think-tank to promote market-based approaches for dealing with environmental concerns.
But perhaps the biggest impact Goldman can have on the environment is by placing pressure on their clients — the largest corporations worldwide. Because Goldman is the channel to literally trillions of dollars in the global capital markets, what Goldman says really matters to clients. Goldman’s clients need to keep the doors open to the investor community, with a good reputation. If Goldman follows through on their environmental pledges, and uses “carrot-and-stick” with its clients to improve their environmental performance, then real beneficial action is likely to in fact take place.
Goldman joins GE and Wal-Mart as major global corporations with huge influence publicly committing to improving the environment in the past year. Titans of industry such as these will be critical in dragging the laggards — the big oil companies, auto manufacturers, electric utilities — into more responsible and proactive environmental practices.