Goldman Sachs Makes $500 Million Appeal for Biodiversity Preservation

Misinformation and outright lies have delayed climate action in the United States for decades, a situation capped by the election of a climate change denier to the presidency in November. Sustainability leaders in the business community cannot undo the choices made by the American electorate. However, they can develop new strategies for pursuing global climate goals, as illustrated by the new biodiversity bond fund introduced by Goldman Sachs Asset Management last week.

DEI, ESG and the U.S. retreat from climate action

The potential for an earthquake-level change in federal social and environmental policy was already in evidence last summer when several leading U.S. brands publicly rolled back their diversity, equity and inclusion (DEI) programs. The move was interpreted as an attempt to deflect a loud and growing chorus of right-wing attacks.

More broadly, deflection was already emerging in sustainable investing circles. By 2023, financial firms were avoiding the acronym “ESG” to describe corporate environmental, social and governance policies in favor of politically neutral language.

In a pivotal moment after Election Day in 2024, Goldman Sachs left the the Net Zero Banking Alliance, a global climate action initiative launched through the United Nations in 2021. Citigroup, Bank of America, Morgan Stanley, Wells Fargo and JPMorgan Chase soon followed suit.

The exodus was widely criticized as a retreat from climate action and ESG investing principles in the face of relentless, politically-fraught criticism. In the case of Goldman Sachs, though, the decision to leave was part of a shift, not a pullback.

Why less public awareness can be a good thing

Last year Goldman Sachs laid the groundwork for a more politically neutral, outcome-effective approach to ESG investing, with a focus on ecosystem services and biodiversity. The effort is aligned with growing investor awareness of the value of “free” ecosystem services including air and water, alongside awareness of the risk factors involved in habitat destruction and species loss.

In contrast to the investor awareness trend, public awareness of biodiversity loss has yet to gain momentum. Surveys show that public awareness of biodiversity loss is consistently lower than climate awareness. In related findings, some researchers raised concerns that the hyper-focus on climate change draws attention away from biodiversity loss, habitat destruction and other pressing environmental issues.

The fact that lower public awareness helps to reduce political pressure to an extent works in favor of the new Goldman Sachs Biodiversity Bond fund. Talking about biodiversity can be an effective, politically neutral way to stimulate investment in climate action, while deflecting politicized attention away from the climate goals expressed by the United Nations and other global organizations.

Policy counts: The Goldman Sachs Biodiversity Bond

Whether the public is aware or not, the new biodiversity bond fund supports the climate action goals of the United Nations, which calls biodiversity “our strongest natural defense against climate change.” Aligning with that stance, the European Union adopted a new transparency platform called the Sustainable Finance Disclosure Regulation (SFDR) in 2019. The new biodiversity fund from Goldman Sachs is designed to meet the requirements of SFDR Article 9, which deals with sustainable investments.

With a five-year goal of raising from $300 to $500 million, about 20 percent of the new fund is dedicated to direct biodiversity bonds such as reforestation. The remaining 80 percent is allocated for “general-purpose bonds” that reflect corporate commitments to sustainability. 

As a reflection of its commitment to the UN climate action aims, the new fund will focus on five of the 17 UN Sustainable Development Goals: clean water and sanitation, responsible consumption and production, life below water and life on land.

Biodiversity bonds will also be aligned with the standards described by the Green, Social, and Sustainability Bond Principles established by the International Capital Market Association.

In a widely reported press statement, Bram Bos — global head of green, social, and impact bonds at Goldman Sachs — took note of the emerging investor appreciation for the value of nature in relation to climate action.

“This fund seeks to provide fixed income investors with exposure to issuers that are having a positive impact on biodiversity," Bos said. "The wide spectrum of the fund’s investment universe enables us to identify promising opportunities for investors." 

Meanwhile, back in the U.S.

Goldman Sachs began building an evidenced-based platform for the new biodiversity fund last year, including the launch of a new reporting and tracking framework in September. 

“As more companies focus on biodiversity and nature to both meet corporate sustainability strategies and manage business risks, Goldman Sachs Research sees rising interest by corporates and sustainable investors to quantify nature-related performance, risk and enablement,” reads the report that announced the new framework.

In the U.S., the federal government has gone in the opposite direction, turning its attention to an “instant cash” investment policy in the form of a new sovereign wealth fund to be created by an executive order from the president. The fund would reportedly be financed by selling off public lands for clear-cutting and other exploitation.

The new biodiversity bond fund from Goldman Sachs is a high-profile demonstration of the extent to which the U.S. is out of step with other democracies on climate action. With the current leadership in Congress unwilling to assert co-equal authority with the executive branch of the U.S. government, the gap will only grow until the 2026 midterm elections. Before then, only the force of public opinion — including the opinion of corporate citizens — can help restore a rational climate policy to the federal government.