Goldman Sachs announced that it will not financially support new oil drilling or exploration in the Arctic and that it will not invest in new thermal coal mines. The bank also earmarked $750 billion for “climate transition and inclusive growth finance” in the next 10 years, Bloomberg reports.
The new policy also came with a statement acknowledging the scientific consensus on climate change, calling it human-caused and “one of the most significant challenges of the 21st century.”
Environmental groups welcomed the Wall Street firm’s new policy as “a crucial first step,” but added that U.S. banks are lagging behind financial institutions in Europe and Asia that have already made similar moves. Environmental groups are cautiously optimistic and are calling for other U.S. banks to follow suit.
“Goldman Sachs’s updated policy shows that U.S. banks can draw red lines on oil and gas, and now other major U.S. banks, especially JPMorgan Chase — the world’s worst banker of fossil fuels by a wide margin — must improve on what Goldman has done,” said Jason Opeña Disterhoft of the Rainforest Action Network in a statement.
The bank’s new environmental policy comes after years of pressure from groups like the Sierra Club, Rainforest Action Network and indigenous groups such as the Gwich’in Steering Committee.
Investment banks, such as Goldman and JPMorgan Chase, have poured in roughly $700 billion worth of investment into fossil fuel companies since the 2016 Paris Climate Agreement. JPMorgan was fossil fuel’s biggest financial supporter, lending some $75 billion that expanded fracking and Arctic oil and gas exploration, according to an investigation by the Guardian.
Goldman’s press release cited environmental reasons for not supporting Arctic drilling but the firm has also made statements suggesting that Arctic drilling is too complex and expensive to make economic sense. And just last summer, Goldman was a top suitor to handle the initial public offering of Saudi Aramco, a Saudi state-owned oil company that is responsible for more greenhouse gas emissions than any other company on Earth.
David Solomon, Goldman’s CEO, detailed the company’s new sustainability efforts in an op-ed in the Financial Times, but went on to acknowledge the role fossil fuels will continue to play in its business: “the world will continue to produce and use fossil-based fuels, aeroplanes, cars and industrial goods, and Goldman Sachs will continue to support clients in transactions that are important to economic activity.”