1、Goldman Sachs ESG:Integrating ESG into Investment Research Global Investment ResearchAHC Group June 2006 Shareholder Value WorkshopSarah Forrest 44-20-7552-Goldman Sachs Global Investment Research2Goldman Sachs ESG ResearchOverviewVision and objectivesWhat is ESG?ESG investment and the SRI marketGol
2、dman Sachs and ESG why?Global Energy Integrating ESG10 reasons for integration of ESG and financeGoldman Sachs Global Investment Research3Goldman Sachs ESG ResearchVision&ObjectivesVisionTo integrate environmental,social and governance issues with industrial analysis and valuation on a sector-by-sec
3、tor basis,and to identify investment opportunities related to carbon finance,alternative energy,and other emerging ESG issues.Long term objectivesTo transfer expertise of ESG issues and research methodology to all sector teams to maintain ESG as part of normal researchGlobal ESG coverage of GS unive
4、rse(2000 stocks in 5 years)Goldman Sachs Global Investment Research4Goldman Sachs ESG Research What is ESG?I.EnvironmentalInputs Energy,WaterOutputs Climate Change,Emissions,WasteII.SocialLeadership Accountability,Reporting,DevelopmentEmployees Diversity,Training,Labour relationsCustomers Product sa
5、fety,Responsible marketingCommunities Human rights,Social investments,TransparencyIII.GovernanceTransparencyIndependenceCompensationShareholder rightsManagement of ESG issues=Proxy for quality of managementGoldman Sachs Global Investment Research5Goldman Sachs ESG Research The SRI Market:Socially Re
6、sponsible InvestmentSRI ModelDescriptionFirmsCharacteristicsSRI FundsFirms that offer institutional and/or retail SRI funds and employ in-house SRI teams to conduct non-financial research.Calvert,CIS,Jupiter,Morley,Henderson and Sustainable Asset ManagementBranded SRI Retail FundsProprietary Investm
7、ent CriteriaSeparation of financial and SRI researchSRI Research ProvidersFirms that provide research and indices on social,environmental,and corporate governance issuesKLD Analytics,Ethibel,and InnovestAlso:EiRIS,TruCost and CoreRatingsConduct no financial researchEmploy social and environmental an
8、alystsTraditional Financial Institutions New To SRITypically global financial institutions serving a broad base of clients focused singularly on performance who view SRI as a value-addFidelity Investments,HSBC Investment Bank,Merrill Lynch Investment Managers,U.S.Trust,and participants in UNEP*No Br
9、anded SRI Retail FundsEstablished traditional investment managersNew to SRI4 common investment criteria as a competitive differentiator:-Negative screening driven by client values-Thematic investing in businesses with direct social or environmental benefit-Shareholder engagement to alter company beh
10、avior-Sustainability analysis to establish a business case for SRISource:Henderson,M.Fox 2003Goldman Sachs Global Investment Research6Goldman Sachs ESG Research SRI Assets under Management Mercers Fearless Forecast surveyed over 200 investment managers globally on the integration of SRI into mainstr
11、eam investing:70%believe that the integration of environmental,social and governance(ESG)factors into investment analysis will be mainstream within 3-10 years;5%predict this in the next 1-2 years 50%believe that active ownership will be mainstream within the next 2 years 60%believe that screening fo
12、r ESG factors will be mainstream within 3-10 years 35%believe corporate governance,climate change,environmental management,and water use will be important investment themes in 5 yearsEuropeans are the most convinced,US managers the least Source:Eurosif,MercerThe Present The FutureGoldman Sachs Globa
13、l Investment Research7Goldman Sachs ESG Research Why ESG?Why Goldman Sachs has launched ESG Research:I.Client demandIncreased focus on corporate governance(Global)Mainstream investors,Pension and SRI funds(US/Europe)II.United Nations Environment Programme Finance Initiative(UNEPFI)MAT1 The Materiali
14、ty of Environment,Social and Governance Issues to Equity PricingIII.Enhanced Analytics Initiative(EAI)Consortium of buy-side funds allocating commissions to encourage ESG researchGoldman Sachs responseFeb 2004:Introducing the Goldman Sachs Global Energy Environmental and Social Index(UNEPFI)April 20
15、05:Launch of ESG Research teamAugust 2005,Feb 2006:Global Energy ESG and European Media ESG publishedUnited Nations Global Compact keynote address by Anthony Ling on behalf of financial communityParticipation in Global Reporting Initiative,UN Principles for Responsible Investment,and IPIECA/API Ener
16、gy industry sustainability reporting guidelinesGS hosted investor conferences and road shows for Energy and Media companies on ESGGoldman Sachs Global Investment Research8Goldman Sachs ESG Research Integration of ESG with Energy Analysis ESG:E=Environment,S=Social,G=corporate Governance Overall mana
17、gement quality Using the ESG Matrix we rank an industry in an index.The leaders perform best in ESG indicators,new legacy assets exposure and increasing cash returns.For global energy,winners from our Global Energy ESG report(Aug 05)and Top 100 projects report(Jan 05)outperformed their peers by 19%a
18、nd 14%on average between Jan 05 and Jan 06ESG frameworkStrong correlation between ESG leaders and new legacy asset winnersSarah ForrestMarc FoxOverall management qualityTop 125 projectsEconomic returns are driven by access to new legacy assetsJonathan WaghornMatt LanstoneAccess to the industrys new
19、legacy assetsDirectors CutValuation and performance are driven by economic returnsAnthony LingRaj MittalValuation and performanceGoldman Sachs Global Investment Research9Goldman Sachs ESG Research ESG adds to share price performancePerformance of Top 100 Categories(Jan 2005 Jan 2006)-28%-24%-20%-16%
20、-12%-8%-4%0%4%8%12%16%High reward,neartermHigh reward,longtermManageableexposureHigh exposure,already priced inLong term,lowerreturnAverage US$share price performance versus industry peers(%)Performance of Energy ESG framework,Top 100 and cash returns categories(Jan 2005 to Jan 2006)Source:Company d
21、ata,Datastream,Goldman Sachs research Goldman Sachs Global Investment Research10Goldman Sachs ESG Research Top 125 projects likely to drive returnsSource:Company data,Goldman Sachs research estimatesIndustry divisional capex split into maintenance and growth,and further split into Top 125 Projects a
22、nd otherG&P maintenance2%Upstream growth37%Upstream maintenance38%R&M growth0%R&M maintenance16%Chems growth0%G&P growth2%Chemsmaintenance5%Top 125 Projects63%Other upstream growth37%Duration and IRR of Majors Top 125 and Top 100 portfolios versus existing businessesGoldman Sachs Global Investment R
23、esearch11Goldman Sachs ESG Research Technical,political,fiscal and labour risks increasingOpportunityRisksWhat is needed for successImpact on performanceWinners 125 projects,177 mnboe,50 more projects out there 20 mnboe/d in 2012E(16%global oil and gas production)US$660 bn capex(c.60%of total growth
24、 capex),US$70 bn cash flow uplift 1.5x profit to investment ratio Technical Political Fiscal Labour Management quality with respect to technology,operations,employees and environment Capital discipline on acquisitions Talented,motivated workforce with correct skills Investment for the medium and lon
25、g term Increasing focus on gas and non-conventional energy sources Ability to negotiate with host governments on fiscal regime and new projects Top 100 winners have outperformed their peers by on average 14%(Jan 05 Jan 06)ESG+Top 100+cash returns winners have outperformed by on average 19%(Jan 05 Ja
26、n 06)Top 125 near term winners:BP,BG,ENI,Nexen,Petrobras,Statoil ESG+Top 125+cash returns winners:BP,BG,Petrobras,RDShell,Statoil,TOTALDelivery of new legacy assets has been poor with a c.3 month delay for projects in the development phase on average since January 2005 versus our estimates;evidence
27、indicates that industry capital costs are up c.35%,production costs up c.25%Source:Goldman Sachs researchGoldman Sachs Global Investment Research12Goldman Sachs ESG Research:The Key Drivers of SRI-Goldman Sachs ESG FrameworkGoldman Sachs Global Investment Research13Goldman Sachs ESG Research Winners
28、 on ESG,Top 125 and cash returnsESG frameworkValuation and performanceIndustrial analysisWinnersSource:Goldman Sachs researchGoldman Sachs Global Investment Research14Goldman Sachs ESG Research10 reasons for integration of ESG in financeUnique role of finance between companies and investorsExperienc
29、e with risk and return balance,meeting liabilitiesESG as foundation for sustainable and strong economyUN Global Compact initiative in 2000Global social and environmental challenges,e.g.secure energy supply,climate change,water shortages,BRICs growthIncreasing awareness of ESG issues by analysts and investorsIncreasing availability of ESG dataUNEP-FI working group of investors request ESG researchWorld Bank Equator PrinciplesSector-specific technical,political and product-related risks
