By Kathryn Wolper
As one of Wall Street’s most powerful and profitable firms, Goldman Sachs has the power to affect trends through investment. Recognizing this power, the firm has recently committed itself to ethical investing by way of a revamped environmental policy, according to the Wall Street Journal. Goldman’s website states that its goal is to allocate $150 billion in capital for clean energy by 2025.
This new environmental policy marks an encouraging amplification of the scale of concern for the environment. Personal regard for the environmental impact of one’s choices can only accomplish so much in the fight against climate change, and the politicization of the issue means that government measures — at least in the U.S. — to regulate energy do not reach far enough. Political disagreement about both the legitimacy of the human role in climate change and how much responsibility individual nations should take on in passing environmental regulations bring about frustrating stalemates.
The commitment to ethical investment and research into clean energy by Goldman Sachs sets a precedent for other large investment companies. Investment companies have shown themselves to have political sway. While this influence is sometimes the object of strong resentment, Goldman Sachs has acknowledged its own power to promote ethical investment and worthwhile dialogues about climate.
Goldman Sachs, as one of the largest and most successful firms, can protect itself against the financial risks associated with ethical investing. If clean energy technologies do not take off as expected, Goldman is large enough to absorb the risk. While the trend of ethical investing may take off as a result of Goldman’s probable success, the hard reality is that many smaller companies can not afford risky investments, however ethical.
Although such risk-taking may not inspire companies of all sizes to invest similarly, it sends a message about corporate responsibility. Furthermore, the measure may help reverse the stigma about unethical corporations focused solely on maximizing profit. If successful, Goldman’s new environmental policy will be a leading example of how ethical investing pays off.
Ideally, Goldman Sachs will find continued success. The company’s initiative can serve as an example of how ethics and profit can coexist. When big companies are rewarded for the strides they take toward being ethical, there is a ripple effect on smaller companies. Energy companies with a focus on green energy may find incentive to succeed because of the prospect of investment by Goldman Sachs. Money talks, and Goldman Sachs is saying all the right things.
