{"id":9702,"date":"2016-11-04T00:24:10","date_gmt":"2016-11-04T04:24:10","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/why-goldman-sachs-should-care-about-climate-change\/"},"modified":"2016-11-04T00:24:10","modified_gmt":"2016-11-04T04:24:10","slug":"even-goldman-sachs-cares-about-climate-change","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/even-goldman-sachs-cares-about-climate-change\/","title":{"rendered":"Even Goldman Sachs Cares About Climate Change"},"content":{"rendered":"

“It’s a matter of business, it’s a matter of economics, it’s a matter of growth…and it’s a matter of the health and wellbeing of all of our stakeholders, including our children and our grandchildren.” \u00a0 –<\/em>Lloyd Blankfein, Nov 2, 2015 (1)<\/p>\n

Why care?<\/strong><\/em><\/p>\n

Goldman Sachs is one of the largest banks in the world, generating over $35 billion in revenue and providing a wide range of investment banking, securities and investment management services to its clients, who include corporations, governments, institutions and individuals.(2)\u00a0Goldman Sachs’ prominent position on the global financial stage means that it plays a crucial role in allocating and providing capital to thousands of institutions in almost every\u00a0region in the world. Whether it is short-term asset\u00a0damage resulting from a violent storm, or determining the proper methodology to account for climate change in asset prices, environmental\u00a0change presents a remarkable challenge to all banks, including Goldman Sachs.(3)<\/p>\n

How will this play out?<\/em><\/strong><\/p>\n

The evidence for climate change is quite clear, with\u00a0the past three decades each being warmer than any decade since 1850 and the level of greenhouse gas at its highest than at any other point during the past 800,000 years. The main driver of this change is emission from the combustion of fossil fuels such as coal and oil, which is only further accelerated by humans’ poor management of environmental resources. Most scientists agree that humans are likely the main contributor to climate change.(4)\u00a0No single issue is more global than climate change.<\/p>\n

Banks have become truly global institutions, allocating capital to institutions on every corner of\u00a0the planet. Given the nature of their business,\u00a0banks are tied to the fortunes of their clients in an intimate way. Putting some numbers to this scenario, we find that nearly 83% of the world’s Fortune 500 companies view climate change as a business risk.(4)\u00a0The view is even more dim when looking on an industry by industry basis, where we observe the following:<\/p>\n