Goldman Sachs' 2020 Sustainability Report...Evolution of LGBTQ+ Rights in Japan...The Pandemic's Impact on Private Equity

[Goldman Sachs]( [BRIEFINGS] April 23, 2021 The Future, Now: Goldman Sachs' 2020 Sustainability Report Despite concerns that the pandemic might draw focus away from sustainability issues, it actually helped to accelerate the momentum behind them, says Goldman Sachs Chairman and CEO David Solomon in the firm’s 2020 Sustainability Report. “Now, as more and more of our clients work with us to meet their decarbonization goals, we can say definitively that sustainability is not an offshoot of our business; it is our business,” he says, adding that the firm has already achieved more than a fifth of its 10-year target to reach $750 billion in financing, investing and advisory activity focused on climate transition and inclusive growth. The report, which was released ahead of Earth Day on April 22, highlights the firm’s work with clients and other stakeholders to help transition to a low-carbon economy and drive broad-based, inclusive growth, such as its recently announced One Million Black Women initiative. Meanwhile, for the first time, the report also included a dedicated [People Strategy Report]( which highlights the firm’s strategy on attracting, developing and retaining its people, as well as the diversity breakdown in its workforce. [Read report]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Future%2C%20Now%3A%20Goldman%20Sachs%202020%20Sustainability%20Report&body=https%3A%2F%2Fwww.goldmansachs.com%2Four-commitments%2Fsustainability%2Fsustainable-finance%2Fdocuments%2Freports%2F2020-sustainability-report.pdf) The Evolution of LGBTQ+ Rights in Japan: A Conversation With GS Advocates Above (L to R): Masakazu Yanagisawa, Akiko Koda and Hiroki Inaba of Goldman Sachs In the wake of a recent court ruling backing same-sex marriage in Japan, Goldman Sachs’ Masakazu Yanagisawa, Akiko Koda and Hiroki Inaba discuss the evolution of LGBTQ+ rights in Japan and companies’ efforts to create more inclusive environments in the latest episode of Exchanges at Goldman Sachs. When Inaba started his career in the 1990s, there was an absence of gay role models in the workplace and in broader society. “Coming out at work essentially meant career suicide,” he recalls. It was years later in 2015, when Inaba was working at Goldman Sachs, that a firm-sponsored mentoring effort for LGBTQ+ students prompted his decision to be open about his sexuality. “You can imagine how difficult it would be to be a mentor for LGBTQ+ students while you are hiding that you are a gay person,” Inaba says. “So I decided to come out to participate in this event.” Yanagisawa, head of prime services for Goldman Sachs Japan, argues that freedom of marriage is not only a human right but is good for business. “People are expected to maximize their ability at work without hiding their sexual orientation or gender identity,” he says. “And that will obviously impact creativity and innovation at work.” Offering equal benefits and creating an inclusive environment not only help in the “war for talent,” Koda says, but boost performance. “As you have more people who are comfortable being themselves, there is a [link between] performance and being out.” [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Evolution%20of%20LGBTQ%2B%20Rights%20in%20Japan%3A%20A%20Conversation%20With%20GS%20Advocates&body=https%3A%2F%2Fyoutu.be%2F3Sffl7YyrMI) The Daily Check-In With Goldman Sachs Above (L to R): Lisa Williams and Eduard van Wyk of Goldman Sachs As companies focus on reducing their carbon footprints, nature-based solutions represent a promising way to remove carbon emissions in the atmosphere, as [Lisa Williams]( of the AIMS Imprint business in the Asset Management Division explains in The Daily Check-In. For example, Apple’s recently announced Restore Fund invests in forestry to remove carbon from the air as trees grow, while also creating sustainable wood supply in regions where there is a significant supply-demand imbalance, she says. In its role managing the Restore Fund, Goldman Sachs will rely on globally recognized standards to assess the impact and opportunities at the project and local levels, Williams notes. “What's clear is that low-quality or low-impact projects are unacceptable to investors and a public that's increasingly sophisticated and really motivated by the urgency of the climate crisis.” In another episode of The Daily Check-In, [Eduard van Wyk]( co-head of Industrials Investment Banking in EMEA, discusses challenges to supply chains around the world and the implications for the global flow of goods. “We think, at the moment, the delays in the supply chain are approximately two to three weeks,” he says. “Our advice [to clients] is very practical...Number one, plan further ahead. Some clients are telling us they are planning 10 to 20 days further ahead than normal. Secondly, diversify your supplier base; don’t put all your eggs in one basket. And thirdly, you should choose fulfillment partners very carefully; favor scale and experience where you can.” [Watch videos]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=The%20Daily%20Check-In%20With%20Goldman%20Sachs&body=https%3A%2F%2Fwww.youtube.com%2Fplaylist%3Flist%3DPLIyiGQywEp65ogt2Bi3vTK7ngXDTM6wT9) Marcus by Goldman Sachs® Quarterly Consumer Sentiment Study U.S. consumers are feeling more upbeat about their finances, although they are starting to worry about the rising cost of living, according to a recent survey by Marcus by Goldman Sachs®, the firm’s digital consumer business. The Consumer Sentiment Survey was conducted in March among a nationally representative sample (using U.S. Census data) of 1,501 respondents. Key findings of the survey include: Rising Optimism. Overall sentiment among Americans is improving compared with the last quarterly survey in December. The percentage of consumers who say they are in worse financial shape compared with where they were six months ago dropped to 27% from 34%, while the percentage of respondents who expect business conditions in the country to improve increased to 27% from 21%. Recessions, Higher Prices Are Top of Mind. Although Americans are more optimistic about their finances, they are increasingly worried about the rising cost of living (47%). Other top concerns are the prospects of an economic recession (47%), followed by health conditions or illnesses (41%). Spending is Likely to Increase. When asked how their spending and savings behaviors may change during the next six months, nearly three-quarters (74%) anticipated they will spend the same or more. Of those who indicated they plan to spend more, 46% expect to spend more on general expenses while nearly one-third expect to spend more on vacations. More than a quarter of Americans (28%) said their biggest financial priority over the next six months will be to pay off debt. [Learn more]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Marcus%20by%20Goldman%20Sachs%C2%AE%20Quarterly%20Consumer%20Sentiment%20Study&body=https%3A%2F%2Fwww.marcus.com%2Fus%2Fen%2Fmedia%2Fblogs%2Fconsumer-sentiment-study) Briefly…on the Pandemic’s Impact on Private Equity At a recent meeting of the Goldman Sachs Asset Management Forum, Mike Brandmeyer, global co-head and co-CIO of the Alternative Investments & Manager Selection Group, and Mike Koester, global co-head of the firmwide Alternatives Capital Markets & Strategy Group, discussed the state of private markets more than one year into the pandemic and how portfolio companies have fared during the crisis. As economies across the world start to reopen, can you give us a sense of where the private equity (PE) industry stands today? Mike Brandmeyer: The PE industry is stronger today than it was a year ago, largely due to key structural shifts that have been underway for more than a decade. Traditionally, PE firms had been primarily focused on leveraged buyouts of more mature, low-growth, asset-intensive businesses that were considered undervalued. Venture and growth equity were smaller parts of the market. In the wake of the financial crisis, younger, high-growth tech companies opted to remain private for longer given an abundance of private capital and the massive growth of the software industry. As a result, venture capital and growth equity firms gained market share while the traditional “buy it, fix it, sell it” LBO model waned in popularity. So PE firms shifted to buying more high-growth, asset-light businesses (often with software-as-a-service business models) and growing them with strong management teams. All of that helped to strengthen the average quality of the portfolio companies and their management teams. So how did PE firms and portfolio companies fare during the pandemic? Mike Koester: When the pandemic hit last spring, PE sponsors employed lessons learned from the financial crisis very quickly. Sponsors and portfolio company management teams were focused on cutting costs, conserving capital and ensuring there was enough liquidity to bridge them to the other side of the pandemic. Irrespective of whether companies operating in adversely affected industries or in businesses that were accelerated by the pandemic, sponsors were able to be agile and decisive in their decisions thanks in part to their ample liquidity positions and their concentrated ownership models. More broadly, powerful fiscal and monetary stimulus benefited the industry as a whole as central banks supported the credit and equity markets. Because of the aggressive intervention, there were far fewer restructurings of PE-backed companies than expected. Can you give us a sense of the trends affecting portfolio companies in the private markets? Mike Koester: Trends that we’re seeing in our portfolio companies are not much different than those observed in publicly traded companies. As portfolio companies work their way through supply chain bottlenecks, they’re experiencing cost pressures through higher freight costs as well as rising wages, particularly in the U.S. where companies are competing with unemployment subsidies and stimulus incentives. Nevertheless, we expect these supply chain challenges and cost pressures to subside. As demand returns, we expect that earnings should exceed pre-COVID levels. We’re optimistic about the outlook for 2021 and 2022. CEO confidence is high as evidenced by their willingness to make investments and acquisitions. Finally, what’s your view on the level of SPAC activity in the market and how does that affect PE firms? Mike Koester: SPACs are an important capital market innovation as they provide companies with another way of going public besides traditional IPOs and direct listings. Many companies, including certain high-growth businesses that require a lot of capital to support that growth, are most efficiently funded in the public markets. That said, the traditional IPO path doesn’t make sense for all companies. Going public via a SPAC allows companies to discuss their long-term growth forecasts, a limitation when listing via traditional IPO. For the PE industry, SPACs represent another potential path to liquidity for our portfolio companies. Mike Brandmeyer: With respect to the level of activity, I do think there are signs of excess—so far in 2021, SPAC launches have already eclipsed last year’s record of 250. Looking ahead, the performance and success of SPACs will be entirely dependent on execution. Winners in the space will likely be the SPACs with experienced sponsors and stronger structures that better align incentives upfront. [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Briefly%E2%80%A6on%20the%20Pandemic%E2%80%99s%20Impact%20on%20Private%20Equity&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2Findex.html) Goldman Sachs Media Highlights Bloomberg - April 21 [Insurers Are Ready for Risk, Goldman's Mike Siegel Says]( Bloomberg - April 19 [Goldman Promotes Kim Posnett to Co-Lead Top Client Services Role]( Bloomberg - April 16 [Goldman Sachs' Hatzius Forecasts Very Strong U.S. Growth]( (13:21) [Subscribe]( [Unsubscribe]( The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. 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