FEM logo
Fund EcoMarket

the sustainable, responsible and ethical investment information hub

How not to do SRI. Guardian article on Goldman Sachs ‘Just’ fund

September 30th, 2018

I am not close enough to say whether or not the specifics of this article are correct, yet none of it really surprises me…

The financial services community has a reputation for audacity and struggles to earn trust.

Reading this article makes the risks associated with the SRI market ‘going mainstream’ very clear.

The piece beautifully articulates how things should NOT be done… and is, in my view, recommended reading for anyone researching this market.

===

Is Goldman Sachs’ new fund really just greenwashing stocks?

Critics are questioning the motives behind a banking giant’s socially responsible investment strategy

The Goldman Sachs company logo in the company’s space on the floor of the NYSE in New York.
 The Goldman Sachs company logo in the company’s space on the floor of the NYSE in New York. Photograph: Brendan McDermid/Reuters

When Goldman Sachs and billionaire Paul Tudor Jones announced a partnership three months ago to help socially conscious investors support “just business behavior”, they promised that their new index fund would generate solid returns for savers while directing their investment dollars towards truly humane companies.

“Capitalism should be a positive force for change,” said Jones in a press release announcing the fund, which is designed to track an index of socially responsible companies identified by his non-profit Just Capital. “Its future will be driven by a new definition of corporate success that is aligned with the values and priorities of the public.”

The partnership comes as pension funds, university endowments and other institutional investors increasingly seek to put their financial weight behind ethical and sustainable corporate behavior. So far, the rebrand seems to be working: the Just fund debuted in June to rave reviews from the financial press and ended its first day of trading with over $250m in assets, making its launch one of the most successful in recent history.

However, a Capital & Main review of corporate documents shows that some of Just’s largest investments are in fossil fuel firms that have been sued for suppressing global climate research, Wall Street behemoths fined for defrauding investors, a social media platform accused of helping rig elections and a tech industry giant criticized for paying its workers starvation wages.

Moreover, proxy voting records reveal that even as Goldman Sachs now markets itself as a champion of social responsibility, the firm has been using its existing stakes in many Just fund companies to help CEOs block key environmental and social justice reforms proposed by their shareholders. Those initiatives range from gender pay gap and diversity initiatives to corporate governance reforms; from efforts to increase lobbying transparency to prohibitions on doing business with companies tied to genocide and other human rights violations.

Meanwhile, in the months before Just fund’s launch, Goldman was slammed for blocking a human rights resolution at its own company – and one of Goldman’s key lobbying groups in Washington was working to shape Republican legislation that would make it far more difficult for shareholders to file environmental, human rights and other socially minded initiatives in the future.

“You shouldn’t be able to, with a straight face, invest in the Dakota Access Pipeline with your left hand, and with your right hand tell people that you’re doing responsible investing,” Lisa Lindsley, capital markets adviser for the shareholder advocacy group SumOfUs, told Capital & Main. “The compartmentalization is very hypocritical.

Through a spokesperson, Goldman Sachs declined to comment on the process by which its equity funds vote on shareholder proposals, and how that process may differ with the Just fund – which, as a newly launched fund, has not yet participated in proxy voting for any of the companies in which it holds stock.

JUST Graph
JUST Graph Photograph: Handout

‘Ethically motivated versus a more greenwashing approach

Goldman’s new fund spotlights socially responsible investing (SRI) – a financial strategy that represents Wall Street’s more affirmative answer to negative or exclusionary “screening” tactics like divestment from fossil fuel producers and tobacco firms.

While a recent directive by the Trump administration has been viewed by some experts as an effort to limit SRI strategies, the market for such investments remains strong. According to the Forum for Sustainable and Responsible Investment, US-based assets managed using SRI strategies more than doubled to $8.7tn between 2012 and 2016, and now account for more than one in five dollars under professional management in the country.

The rise in SRI investment comes amid questions about whether corporate boards are adequately evaluating environmental and social justice concerns when they look at their company’s long-term financial prospects. PwC’s 2017 survey of corporate officials found “that directors are clearly out of step with investor priorities in some critical areas” and the report added that “one of these areas is environmental issues”.

 

Read more here…

 

 

Full URL:

https://www.theguardian.com/business/2018/sep/28/is-goldman-sachs-new-fund-really-just-greenwashing-stocks?CMP=share_btn_link

Sign Up to our Newsletter

If you are a Financial Services Industry professional you can sign up for our newsletter

Click Here

Latest News

New Fund EcoMarket brochure available for download
April 13, 2021
Fund EcoMarket brochure 2021

I am delighted to be able to share our new (A4) downloadable & printable Fund EcoMarket brochure… Download via this link: FEM brochure April 2021 Final The brochure includes the following: An introduction to the Fund EcoMarket fund database tool A snapshot of the number of funds in each of our ‘SRI Styles’ A ‘filter field […]

Climate considerations now embedded across main UK financial regulators
March 25, 2021

During UKSIF’s excellent ‘Ownership Day’ event today I was delighted to hear from their keynote speaker Mark Manning of the FCA, that the Chancellor of the Exchequer Rishi Sunak has formally written to Nikhil Rathi, Chief Executive of the FCA, with notification that the government now requires climate change to form part of the regulator’s […]

SRI Styles update – ‘ethical’ funds now in single category
March 16, 2021

We have today updated our Fund EcoMarket ‘SRI Styles’ fund classifications to combine ‘Negative Ethical’ and ‘Balanced Ethical’ funds into a single style now called simply: ‘Ethical’. When we created Fund EcoMarket back in 2010 by far the largest proportion of funds in this area were referred to as ‘ethical’ – and focused significantly on […]