HONG KONG (BLOOMBERG) – Goldman Sachs Group has more than tripled environmental, social and governance (ESG) investments in Asia, stepping up efforts to meet a growing need from clients to limit their greenhouse gas footprints.
The American bank has completed nearly 15 investments based on ESG criteria in the past two years, up from just four during the previous period, people familiar with the matter said.
It is also in discussions with several major investors and companies in Asia, in an effort to broaden its push into other types of environmental and socially responsible projects.
“We’ve raised and will continue to explore customised mission-driven funds to address the diverse needs of our client investors who need to deploy private capital across the globe in this space,” Mr Takashi Murata, co-head of alternative investing in Asia, said in an interview, declining to name the potential partners or the size of the investments.
“Our initial ESG investments have been primarily focused on advancing climate transition through clean energy, but our goal is much broader.”
The push comes as Goldman is seeing earlier investments pay off through exits after making its first bets on renewable energy in Asia back in 2006, and has since 2013 put up about US$3.5 billion (S$4.8 billion) in more than 20 Japanese solar projects, the people said.
The growing climate crisis is accelerating the focus on ESG, but the global pandemic has also underscored the need for greater social investing, an MSCI survey of 200 institutional investors overseeing about US$18 trillion found.
Goldman has now disposed of half of its solar projects in Japan, including the US$1.8 billion stake sale of Japan Renewable Energy to Eneos Holdings in October, the people said.
It has also made renewable energy investments in China, Korea and made a partial exit in Renew Power, India’s largest renewable energy generator, through a US$1.2 billion Nasdaq listing in August after merging with a blank-check company.
Stiff Competition
Goldman is facing stiff competition. A record 132 so-called impact funds have started this year, according to data from Preqin, which tracks the industry.
The category has amassed US$20 billion since 2015, data compiled by Bloomberg shows.
Impact funds often target investments in renewable energy, health care, affordable housing, or other socially important industries
Global ESG assets are on track to exceed US$53 trillion by 2025, or more than a third of the US$140.5 trillion in projected total assets under management, according to Bloomberg Intelligence (BI).
While Europe accounts for half of global ESG assets, the United States is now picking up the fastest and may dominate the category starting in 2022.
The next wave of growth could come from Asia – particularly Japan, according to BI research.
Goldman, though not its fund management unit, was among banks, investors and insurers that last month committed to decarbonising by mid-century as signatories of the Glasgow Financial Alliance for Net Zero.
Still, the initiative was met with scepticism as activists and nonprofits questioned whether big finance is capable of rapidly weaning itself off fossil fuels. Goldman, along with others, has previously made it clear that it is not feasible to stop working with the industry.
“We have to recognise we are trying to drive very dramatic change,” Goldman chief executive David Solomon said at the Bloomberg New Economy Forum in Singapore last month, emphasising that the transition will take time.