Thought leadership paper on sustainable investing, North America & ESG research of the year, Asia: Goldman Sachs

Goldman Sachs’ Black Womenomics research paper highlights the inequitable history and relatively limited economic progress of black women in the US.

The paper argues they remain significantly disadvantaged across a range of economic measures, including access to housing, healthcare, education and capital in the country.

It finds that the median black US household owns 90% less wealth than the median white household, with an even larger gap between single black women and single white men. In addition, the average per-hour earnings gap, or ‘wage gap’, between these two groups currently stands at 35%. After declining over the decades, this decline has now stalled and is in fact growing.

By reducing this gap, the paper claims, there is the potential to create 1.2 million to 1.7 million jobs and grow the US economy by between $300 million and $450 million.

The research was foundational to the firm’s commitment to invest $10 billion in direct capital and $100 million in philanthropic support over the next decade, with the explicit aim of narrowing opportunity gaps for at least one million black women in the US, it said.

“Research and advocacy are critical to advancing racial economic equality,” said Gizelle George-Joseph, chief operating officer of global investment research at Goldman Sachs. “Black Womenomics spotlighted that equalising black women’s positions isn’t just the right thing to do, but it’s a smart investment and helps create an economy that’s working for everybody.”

Elsewhere, Goldman Sachs also won the ESG research of the year, Asia award for its report, Navigating Asian ESG regulation and compliance towards net zero objectives.

The firm highlighted the green premium or ‘greenium’ within ESG policy trends to help investors understand these as they continue to emerge, and therefore identify stocks that may benefit from future regulation. This is  particularly relevant as the Asia-Pacific region has seen a doubling of ESG policies over the past five years and now contributes 20% of global ESG policy, resulting in corporate disclosure in these markets that matches or even exceeds the US, according to the report.

By looking at the EU taxonomy as a proxy for future Asia-Pacific standards, Goldman Sachs found that ‘highly-aligned’ global companies were trading at 37% enterprise value sector-relative premiums, and that this increases to between 55% and 64% for ‘highly-aligned’ Asia’-Pacific stocks, dominated by China wind and solar energy companies.

As for carbon-intensive companies, the report finds that low-carbon-intensity companies were trading at a 20% premium compared with their high-intensity industry peers, while those demonstrating ‘material’ decarbonisation progress were trading at a 14% premium to their peers.

“ESG regulation will influence capital flows across APAC financial markets in the coming years,” said Emma Jones, member of the GS Sustain team at Goldman Sachs. “This Goldman Sachs report provides a framework for investors to help navigate the regulatory landscape across the region, identifying potential beneficiaries that may see expanding valuation premia.”