Reuters
- While Goldman said it had set a new policy to no longer finance Arctic oil drilling projects, the bank had effectively stopped doing that years ago, according to a Goldman official who asked for anonymity.
- Goldman joins JPMorgan in taking a stand and walking away from a business that ran afoul of prevailing social concerns but didn't bring in much revenue.
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Goldman Sachs just became the first US bank to say it won't finance or participate in projects that drill for oil in the Arctic, including Alaska's Arctic National Wildlife Refuge, according to new policies the bank made available on its website.
But the bank hasn't done much of that anyway. Goldman's risk management policies have precluded it from engaging in such activities, according to a person with knowledge of the bank's policies and who asked for anonymity to speak openly. The bank hasn't done that type of financing in "some time" or "recent memory," the person said, without specifying the exact timeframe.
The reason is that Goldman, like other banks, uses a form of environmental or social risk management analysis to evaluate potential projects. That means that as the bank is considering whether to finance or underwrite a project that touches on indigenous habitats or human rights issues or protected areas, it already had a framework that led it to avoid such business - before the recent announcement.
The bank also stopped short of holding back financing for companies engaged in Arctic drilling, choosing to only stay away from those projects that are directly raising funds for such activities, according to the Rainforest Action Network. The bank's policy also allows it to continue to work with pipeline providers carrying oil from the Arctic, according to the non-profit.
Goldman rolled out a series of sustainable finance announcements on Sunday, the same day the United Nations reached a climate agreement some criticized for being too lax. Goldman CEO David Solomon wrote an op-ed in the Financial Times touting the bank's plans and explaining its reasoning. The bank also said it would finance, invest or advise on projects worth $750 billion over the next 10 years as long as it helps the world transition to a greener climate or more inclusive economic growth.
It was the first time since 2015 that the bank had updated its environmental policy framework. Goldman joins more than a dozen global banks that have already made promises to stop participating in Arctic drilling, according to the Sierra Club.
In 2018, Goldman evaluated 578 oil and gas transactions for environmental and social risk, according to its website. It looked at another 415 relating to power generation, and metals and mining. It didn't say how many of those it rejected.
It also joins other US banks in taking stands on social issues. In March, Citigroup said it would stop doing business with clients unless they set some parameters around gun sales, while JPMorgan said it would stop financing private prisons and detention centers. Like Goldman, JPMorgan took a stand against something that accounted for little to no financial gain.
