Goldman gives itself a decade to clear a low bar on clean energy

May 25, 2012

With its third-ever tweet, Goldman Sachs announced its intention to finance or invest $40 billion in clean energy over the next decade (also known as $4 billion a year for 10 years). But you won’t hear Goldman say $4 billion a year. In an attempt to generate impressive headlines, Goldman decided to go with a number that looked big and settled on $40 billion.

Put that commitment in the context of Goldman’s overall investing and lending activity and its lack of heft is obvious. In 2011, Goldman Sachs did $258 billion in financing and made investments worth another $4.4 billion. Goldman’s $4 billion clean energy commitment is just 1.5% of this $262 billion total. And that number drops to 1.3% if you compare $4 billion to Goldman’s 2010 financing and investing activity. If the overall levels investing and financing grow, as I’m sure Goldman is planning for, the clean energy commitment becomes even more irrelevant compared to the firm’s comparable mainline businesses.

Things don’t look much better in the context of the overall clean energy market. Compare Goldman’s commitment to the $260 billion market for clean energy investing and financing in 2011 and you get get a market share of 1.5%. I can’t imagine Goldman ever tolerating, let alone celebrating, 1.5% market share in equity underwriting, M&A or any other business it was serious about.

Remarkably, $4 billion a year looks even worse compared to what Goldman has already done. In 2010, it did $9.3 billion in clean energy investing and financing. In 2011, $5.3 billion. In other words, Goldman just committed to finance and invest in clean energy at a lower rate for the next 10 years than in has over the last two years.

Neither senior management nor shareholders would tolerate that kind of planned decline in any other context. Others disagree, but when it’s stacked up against the numbers, this announcement amounts to nothing more than a disingenuous attempt by Goldman to solicit applause for committing to do less than it currently is.

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