GS - Sustainable Investing Group
Any insights into the "Sustainable Investing Group" at GS?
Understand they recently launched a dedicated fund and mandate seems to be across Growth Equity and Private Equity, cross-sector focus including sustainable transportation, clean energy and power, energy technology and sustainable materials as well as agriculture and water.
Would be curious to hear thoughts on this strategy as I appreciate some peers are struggling (e.g. TPG Rise).
Based on the WSO Dataset, the Sustainable Investing Group at Goldman Sachs (GS) reflects a growing trend in the finance industry towards ESG (Environmental, Social, and Governance) and impact investing. While the context doesn't provide specific details about GS's Sustainable Investing Group, we can infer some insights based on the industry's movement and GS's reputation for innovation and leadership in investment banking.
Cross-Sector Focus: The mention of sectors like sustainable transportation, clean energy and power, energy technology, sustainable materials, agriculture, and water indicates a broad and impactful approach. This diversity allows for a wide range of investment opportunities that not only promise financial returns but also contribute to environmental sustainability and social well-being.
Comparison with Peers: The reference to TPG Rise's struggles highlights the challenges within the ESG investment space, including measuring impact and achieving competitive returns. However, GS's entry with a dedicated fund suggests confidence in overcoming these challenges. Given GS's resources, research capabilities, and network, they might be better positioned to identify and capitalize on sustainable investment opportunities that offer both impact and financial returns.
Market Trend and Demand: The increasing interest in ESG and sustainable investing is driven by a combination of factors, including regulatory changes, societal shifts towards sustainability, and the recognition of ESG factors as material to financial performance. GS's move aligns with this trend and meets the growing demand from investors, especially millennials and institutional investors, who are increasingly prioritizing sustainability alongside financial returns.
Potential for Innovation: GS's involvement in sustainable investing could spur innovation in the sector. Their ability to leverage financial instruments, technology, and market mechanisms to address sustainability challenges could set new standards and practices in the industry.
Challenges and Opportunities: While the sustainable investing space offers significant opportunities, it also comes with challenges such as defining and measuring impact, dealing with greenwashing, and navigating the evolving regulatory landscape. GS's approach to these challenges, including their methodologies for impact assessment and their strategies for identifying genuine opportunities, will be critical to their success.
In conclusion, GS's Sustainable Investing Group represents a significant development in the ESG and impact investing landscape. Their broad sector focus and the strategic approach to sustainable investing could provide valuable insights and set benchmarks for the industry. However, the success of their strategy will depend on their ability to navigate the challenges inherent in sustainable investing and to deliver on both impact and financial performance.
Sources: Sustainable Investing -- The Real Deal or Bullshit?, Thoughts on Power and Renewables IB, TPG Growth/Impact insight? Culture/comp/hours?, Thoughts on TPG?, Barclays Sustainable and Impact Banking Group
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Saying TPG Rise is struggling when they closed a $7.5bn first time climate fund and are looking to raise a second even larger fund is crazy.
OP here - not in the space so appreciate your insight.
I’m trying to gauge whether « Sustainable Investing » is a trend or here to stay (lots of WSO topics already covering it but I’m trying to remain factual).
Understand GS Horizons I is almost fully deployed already so they will have to fundraise soon. With that in mind, there was an article end of last year about TPG missing its target for its third Rise Fund ($2.7bn vs. $3bn hardcap).
Okay so a few things to answer here.
Firstly, CLIMATE investing is definitely here to stay. It’s been incredibly busy the past few years and that’s only accelerated recently as more countries/regulators set emissions targets, disclosure requirements, etc. Climate is one of the hottest (haha) areas of investing.
Second, TPG Rise is an IMPACT platform split between climate, broader impact, and a few other smaller strategies. Think about it as the E vs. S in ESG. Rise is ~$20bn AUM, split between climate and social impact investing. The fund you’re referencing was Rise 3, the 3rd social impact fund (versus the Rise Climate is on fund 1). I think $2.7bn is a strong close given all the political noise around “ESG” the past year or two and the broader fundraising environment being absolute shit rn. Read this article for context, but outside of a handful of firms most PE funds are struggling to raise funds right now - https://l.smartnews.com/p-HNndZ/Y8nVgz
Super helpful (and much clearer than TPG's website)!
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