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Goldman Sachs adds ESG criteria to money market fund

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Goldman Sachs Asset Management (GSAM) will apply an environmental, social and governance (ESG) strategy to its euro-denominated money market fund to provide investors with sustainable cash solutions.

The Goldman Sachs Euro Liquid Reserves Fund’s investment objective is capital preservation and provision of daily liquidity by investing in investment grade government and non-government money market securities.

The ESG strategy will be complementary to the strategy, GSAM said.

“Based on extensive analysis and the stringent credit quality requirements of our AAA-rated money market funds, we do not anticipate a material impact to the fund’s investment strategy or liquidity profile,” GSAM commented.

ESG criteria

The fund will screen out issuers from the universe that have been identified to operate in the most common controversial sectors.

This includes: controversial weapons, tobacco, civilian firearms, alcohol, adult entertainment, gambling and certain fossil fuels, including specific coal, shale gas, shale oil and oil sands, as well as those that violate the UN Global Compact principles.

It will also apply an engagement strategy focused on diversity and inclusion to the fund, and engage with corporate and financial issuers who have material under-representation of women at the board level, which it currently defines as below 10%.

The fund will also prefer to select green, social and sustainability (GSS) labelled securities whenever these are consistent with its risk/return perspective and investment objectives.

Plans

Over the coming months, GSAM is planning to roll out a similar approach to two or three similar funds, and in other currencies, a spokesperson said.

The list of excluded activities, themes and thresholds will evolve over time, and ESG rating provider MSCI will deliver the constituent information.

The fund will continue to operate as a low-volatility net asset value money market fund under the European regulation.

Kathleen Hughes, global head of liquidity solutions client business at GSAM and member of its sustainable finance cross-divisional steering group, said: “ESG is becoming a pre-requisite rather than a nice to have.”

GSAM, the asset management arm of the Goldman Sachs Group supervising approximately $1.44tn (€1.3tn) in assets as of June 30, has over $400bn in assets under supervision in money market strategies and $50bn in ESG and impact strategies.

Elena Johansson

Senior Reporter