European Money Market Funds and the ESG Juggernaut

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Goldman Sachs Asset Management tweaks a money management fund for ESG, especially diversity.

Goldman Sachs Asset Management (GSAM) is heeding the ESG clarion call from investors. The asset manager has introduced environmental, social, and governance criteria in a Euro money market fund.

GSAM has “enhanced” the Low Volatility NAV euro money market fund for ESG considerations via a two-fold strategy.

Goldman Sachs  (GSAM) will apply “exclusion screens” on companies in ESG-negative sectors such as weapons, tobacco, fossil fuels, and violators of UN climate principles.

On the other hand, it will employ a reach-out, corporate engagement strategy to promote diversity and inclusion in issuers. Such engagement could include issues such as the percentage representation of women on boards. There could be other “diversity-related” challenges that the strategy could address as well.

ESG and Goldman: Strong interest from investors

As the ESG juggernaut rolls on, GSAM will employ a similar modus-operandi for money market funds of other currencies.

In April this year, Blackrock addressed institutional demands for cash management to reflect climate change concerns. The fund manager launched the Liquid Environmentally Aware Fund (LEAF), its first environment focused fund in Europe. The fund objective is to seek as high a level of current income as is consistent with liquidity and preservation of capital while considering select environmental criteria. According to Melanie Seymour, head of global client service at BlackRock, LEAF received “phenomenal flows” in just a few months.

“ESG is becoming a pre-requisite rather than a nice to have,” said Kathleen Hughes. She is Global Head of the Liquidity Solutions Client Business at GSAM.

“We believe the enhancements we have made to our Euro money market fund will resonate with investors looking for a cash solution that is considerate toward ESG.”

[Related Story: Goldman CEO David Solomon: Time for ESG Investing to Go Mainstream ]

 

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