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Goldman Sachs CEO: Governments must put a price on cost of carbon

Goldman Sachs CEO David Solomon wrote in a Financial Times op-ed that “to give us the best chance of combating climate change, governments must put a price on the cost of carbon, whether through a cap and trade system, a carbon tax, or other means.”

The banking giant also announced that it’s overhauling its environmental policies, including “targeting $750 billion in sustainable finance growth themes by 2030″ and curbing the funding of fossil fuels.

Goldman Sachs revised its Environmental Policy Framework for the first time since 2015.

The bank will not finance any new upstream Arctic oil exploration or development or any new coal-fired power generation project unless it also includes carbon capture or emission cutting.

It won’t finance new thermal coal mine developments and will phase out financing for thermal coal mining companies that don’t have transition plans.

The bank will work with mining companies to cut emissions, and companies’ progress on cutting emissions will impact future financing. However, Solomon said, the bank will “continue to support clients in transactions that are important to economic activity.”

Solomon continued in his op-ed:

There is not only an urgent need to act, but also a powerful business and investing case to do so.

Looking ahead, the needs of our clients will increasingly be defined by sustainable growth. Our firm’s long-term financial success, the stability of the global economy, and society’s overall well-being depend on it.

Strengths and weaknesses

In response to Goldman Sachs’ announcement, the Rainforest Action Network and the Sierra Club released an analysis of the strengths and weaknesses of the bank’s new environmental policies (click on the link to read it in full). They write:

Goldman Sachs’ fossil finance policy is now the strongest among the big six US banks (the others being Bank of America, Citigroup, JPMorgan Chase, Morgan Stanley, and Wells Fargo). Goldman Sachs now has the strongest coal policy, and is the only bank in this group with any restrictions on any area of oil and gas financing.

This policy revision does not, however, make Goldman Sachs a leader among major global banks; currently, the strongest policies among the bank’s global peers are from Crédit Agricole (France) on coal, and BNP Paribas (France), and UniCredit (Italy) on oil and gas.

Overall, this policy revision from what its peers consider the most prestigious investment bank on Wall Street underlines that coal is an industry with no future. The policy also sets precedent on oil and gas, in that it is the first policy to preemptively restrict financing for any part of the oil and gas sector by a major US bank.

Electrek’s Take

This is a good precedent to set for a major US bank, but we at Electrek are in agreement with the Rainforest Action Network and the Sierra Club that Goldman Sachs needs to take their fossil finance policy further. The bank needs to stop funding fossil fuels entirely. Explicitly, that means oil and gas as well as coal.

Hopefully, Goldman Sachs’ actions will encourage other major US banks to follow in its footsteps, but they all have some catching up to do with many global peers.

Further, we couldn’t be more in agreement with Solomon: Electrek firmly believes that the most effective way to promote green energy is with a carbon tax.

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Avatar for Michelle Lewis Michelle Lewis

Michelle Lewis is a writer and editor on Electrek and an editor on DroneDJ, 9to5Mac, and 9to5Google. She lives in St. Petersburg, Florida. She has previously worked for Fast Company, the Guardian, News Deeply, Time, and others. Message Michelle on Twitter or at Check out her personal blog.