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May 03, 2023

Almost third of votes back climate proposal at Goldman Sachs

Resolution seeks report on transition plan for bank’s financing activities

A shareholder proposal seeking information about Goldman Sachs’ plans to shift away from greenhouse gas (GHG) emissions in areas where it is providing finance garnered almost a third of the votes cast at the bank’s AGM on April 26.

According to an SEC filing, the resolution was backed by 30 percent of votes placed, a level of support generally regarded as significant among corporate governance experts. The vote comes as shareholder advocates and shareholders increasingly press companies to not just set targets for reducing their carbon footprints but also explain how they intend to reach those goals – and how financial services firms are approaching GHG emissions arising from the work they do with clients.

As You Sow’s proposal asks Goldman Sachs to ‘issue a report disclosing a transition plan that describes how it intends to align its financing activities with its 2030 sectoral [GHG] emissions reduction targets, including the specific measures and policies necessary to achieve its targets, the reductions to be achieved by such measures and policies and timelines for implementation and associated emission reductions.’

In its supporting statement, As You Sow writes that Goldman Sachs is a member of the Net-Zero Banking Alliance, has announced a goal of reaching net-zero by 2050 for its financed GHG emissions and has set 2030 intensity reduction targets for the oil and gas, power and auto manufacturing sectors.

The shareholder advocacy group quotes Goldman Sachs as stating that to meet these targets it is ‘expanding its commercial capabilities to help clients measure and manage their climate-related exposure’, ‘developing new financing tools tied to progress on climate transition’ and investing in ‘climate solutions and emerging technologies’ for hard-to-abate sectors.

‘While the described actions will help clients manage and reduce their emissions, they do not demonstrate a concrete transition plan for how Goldman will achieve its 2030 sectoral reduction targets,’ As You Sow writes. ‘An effective transition plan creates accountability by describing the indicators, milestones, metrics and timelines necessary to deliver on its decarbonization targets and ensure investors that it is accountable for reducing its financed emissions in alignment with its 2030 targets.’

The group explains that a transition plan might include the disclosure of clients’ estimated annual reductions and how the firm intends to achieve remaining emissions reductions. It might also include elements such as client and employee incentives or disincentives, setting loan approval guidelines and setting investment and underwriting priorities.

As You Sow welcomes the support the shareholder resolution achieved, which it had filed with Goldman Sachs for the first time this year. ‘Although Goldman has committed to aligning key sectors of its financing portfolio with net-zero targets, its plan for achieving those goals is unclear,’ says Danielle Fugere, president of As You Sow, in a statement. ‘Goldman must put a plan in place that drives decision-making from the top down, starting with governance and ending with banker decision-making on new financing. Reliance on clients or outside events is insufficient.’

She adds: ‘This strong vote is a call to action. Goldman Sachs has demonstrated leadership in setting 2030 targets aligned with global climate goals. Now comes the hard work of making its plan actionable.’

Goldman Sachs’ board had recommended that shareholders vote against the proposal. In the company’s 2023 proxy statement the board writes: ‘Goldman Sachs has long been committed to providing innovative commercial solutions for our clients to address and manage climate-related risk and accelerate the climate transition. We view climate transition as a key driver of both risk and opportunity, and we have been innovating and expanding our commercial capabilities to help our clients navigate the transition.

‘We share the proponent’s view on the importance of transparency regarding our climate transition commitments. To this end, we have already provided extensive public disclosures, including through our sustainability reports, TCFD reports and a dedicated portion of our website… and we continue to update this reporting on a regular basis.

‘As a result, preparing the report requested by the proposal would impose an additional administrative burden on our firm without providing material new information to our shareholders. As such, we believe the adoption of this proposal is unnecessary and not in the best interests of our firm or our shareholders.’

Among other things, the company writes that it will publish an updated TCFD report later this year outlining its progress toward its sectoral targets and ‘provide additional details of how we are integrating climate-related measurements across our business.’

A Goldman Sachs spokesperson says in a statement: ‘The transition to a more sustainable economy will be a decades-long effort requiring significant innovation and investment across the entire economy. The role of Goldman Sachs is to help our clients unlock the enormous opportunities ahead as they navigate through the complexity of this transition.’

Ben Maiden

Ben Maiden is the editor-at-large of Governance Intelligence, an IR Media publication, having joined the company in December 2016. He is based in New York. Ben was previously managing editor of Compliance Reporter, covering regulatory and compliance...