Funds Group: Goldman Sachs Funds
Management Company: Goldman Sachs Asset Management, L.P.
Funds Affected: (1) Goldman Sachs JUST US Large Cap Equity ETF, (2) Goldman Sachs ESG Emerging Market Equity Fund, Goldman Sachs International Equity ESG Fund
Principal Sustainable Investment Management Strategies: Negative screening (Exclusions), ESG Integration, Shareholder engagement
(1) Investment universe consists of companies selected based on their annual ranks using a quantitative performance assessment of seven issue areas: how they treat their workers, their customers, the communities they interact with, the environment, and their shareholders, their commitment to making quality and beneficial products, and job creation.
Greater accountability in the business community is encouraged while also seeking to drive positive change among large publicly-traded U.S. corporations by (a) defining business behaviors that the American public cares most about (through extensive qualitative and quantitative survey research), (b) developing metrics that correspond to these issues in accordance with a robust, transparent methodology, (c) ranking the largest publicly traded U.S. companies on the basis of these metrics, and (d) developing tools and products that allow investors to direct capital towards more “just” companies.
(2) The funds invest in equities that Goldman Sachs believes adhere to the funds’ environmental, social and governance (ESG) criteria. The applicable ESG criteria are generally designed to exclude companies with weak corporate governance, and/or companies that are involved in, and/or derive significant revenue from, certain industries or product lines, including: gambling, alcohol, tobacco, coal, and weapons.
Once it has been determined that the issuer meets the funds’ ESG criteria, GS conducts a supplemental analysis of individual companies’ corporate governance factors and a range of environmental and social factors that may vary by sector. This supplemental analysis will be conducted alongside traditional fundamental, bottom-up financial analysis of individual companies, using traditional fundamental metrics. GS also engages in active dialogues with company management teams to further inform investment decision-making and to foster best corporate governance practices using its fundamental and ESG analysis. In addition, GS seeks to avoid what it believes to be structurally unattractive market segments.
The funds may also invest up to 20% of net assets in equity investments that may not may not adhere to the funds’ ESG criteria and in fixed income securities, such as government, corporate and bank debt obligations.
Note: The Goldman Sachs International ESG Fund, formerly called the Goldman Sachs Focused International Fund, adopted its ESG integration strategy as of February 27, 2018.