The Future of ESG Finance

• Goldman Sachs issued an $800 million five-year non-callable sustainability bond to fund assets aligned with two core themes: climate transition and inclusive growth.
• The bond proceeds will be deployed for new asset investments on the firm's balance sheet rather than refinancing existing assets.
• The initiative operationalizes the firm's previously announced $750 billion commitment to sustainable finance advisory and lending activity.
• The bond issuance was four times oversubscribed, leading Goldman Sachs to increase the offering size beyond original expectations.
• More than 50% of the bond allocations were purchased by ESG-focused investors, while the issuance attracted new investor segments who had previously not purchased Goldman Sachs bonds.

Strategic Framework and Investor Alignment

• A robust internal framework and asset tracking mechanism were developed over the last year in response to investor concerns regarding "greenwashing."
• The firm engaged with over 60 investors pre-issuance, addressing specific demands for a programmatic approach rather than a one-time issuance.
• Goldman Sachs committed to returning to the bond market every 12 to 18 months to maintain a recurring sustainable finance program.
• An external second-party opinion was obtained for the framework, and the firm committed to annual, audited reporting on the funded assets.

Specific Investment Examples

• Climate Transition: The firm made an equity investment in Block Power, a company using machine learning to upgrade urban building energy systems to reduce emissions and improve air quality.
• Inclusive Growth: The firm facilitated financing for the National Urban League's new headquarters in Harlem, which will serve as the organization's new office, rent-free space for local nonprofits, and the site for New York's first civil rights museum.

Market Outlook and Trends

• Over the past seven years, Goldman Sachs has advised more than 100 clients on green, social, and sustainable bonds.
• Deputy Treasurer Liz expected sustained growth in sustainable issuance from both issuers and investors, driven by the heightened importance of climate transition and inclusive growth.
• The firm views sustainable economic growth and financial opportunity as fundamental to its corporate purpose, necessitating continued involvement in this sector.