Goldman Sachs Alternatives has launched a new dedicated private climate credit strategy to provide funding through loans to climate and environment related businesses. The company said the strategy has already attracted $1 billion of institutional equity.
The Climate Credit strategy, managed by the Private Credit business at Goldman Sachs Alternatives, is focused on senior or high performing credit and can invest across the capital structure. The company said sustainable solutions have emerged as a key thematic for many corporations while innovation and scale are increasing the cost-effectiveness of many climate solutions, and policy considerations are creating unique market opportunities.
The company’s approach to sustainable finance has sent mixed messages, however. Goldman recently launched a bond fund for biodiversity shortly after leaving the Net Zero Banking Alliance and walking away from a debt-for-nature swap it was part of in Ecuador.
The company noted that, compared to private equity capital for sustainable-focused investments, private debt capital has been sparse. It reasoned that, because of increasing demand, that creates an opportunity for lenders. Given regulatory changes, tax incentives, and the maturation of climate transition industries, Goldman said, companies are increasingly seeking flexible debt capital to meet their financing needs.
“We see significant opportunities to address the supply-demand imbalance in private credit solutions related to climate transition,” said James Reynolds, Global Co-Head of Private Credit at Goldman Sachs Alternatives. “Substantial capital has been raised for private equity investment in the space and debt solutions are needed to provide further scale. We look forward to partnering with leading companies and financial sponsors to deliver performance for our clients and are deeply appreciative of the support we have received so far from investors in this new strategy.”
