Goldman triples its Asia ESG investments as demand grows

Bloomberg

Goldman Sachs Group Inc has more than tripled environmental, social and governance investments in Asia, stepping up efforts to meet a growing need from clients to limit their greenhouse gas footprints.
The New York-based 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, asking not to be identified because the information isn’t public. It’s 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,” 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 $3.5 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 $18 trillion found.
Goldman has now disposed of half of its solar projects in Japan, including the $1.8 billion stake sale of Japan Renewable Energy Corp to Eneos Holdings Inc 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
$1.2 billion Nasdaq listing in August after merging with a blank-check company.
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 $20 billion since 2015, data compiled by Bloomberg show.
Global ESG assets are on track to exceed $53 trillion by 2025, or more than a third of the $140.5 trillion in projected total assets under management, according to Bloomberg Intelligence. While Europe accounts for half of global ESG assets, the US 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 skepticism as activists and nonprofits questioned whether big finance is capable of rapidly weaning itself off fossil fuels. Goldman, along with others, have previously made it clear it’s not feasible to stop working with the industry.
“We have to recognise we are trying to drive very dramatic change,” Goldman Chief Executive Officer David Solomon said.