Goldman Sachs has launched a new biodiversity bond fund aimed at addressing the urgent need for biodiversity conservation and aligning with the United Nations’ Sustainable Development Goals (SDGs). The fund is distinguished as one of the first fixed-income products focused on biodiversity, marking a significant step in sustainable investment.
The biodiversity bond fund will adhere to the European Union’s Sustainable Finance Disclosure Regulation (SFDR), specifically Article 9, which mandates detailed disclosures about how funds achieve their sustainable objectives. According to Goldman Sachs, the fund will ensure that at least 90% of its investments are sustainable, with the remaining 10% being allocated to non-qualifying investments. The firm’s February 26 disclosure emphasized the fund’s commitment to transparency in its operations and its goal to impact biodiversity positively.
This launch comes at a time when global interest in biodiversity-focused funds is on the rise. As of September, there were at least 24 biodiversity-themed funds worldwide, collectively managing over $1.6 billion in assets, according to MSCI. While this marks a significant increase in investment, MSCI noted that the majority of such funds remain equity-based, focusing primarily on large-cap stocks in developed markets.
Bram Bos, Global Head of Green, Social, and Impact Bonds at Goldman Sachs Asset Management (GSAM), commented, “Investors are increasingly focused on maintaining and enhancing biodiversity, not just achieving climate targets. This fund provides fixed-income investors with exposure to companies making a positive impact on biodiversity.”
GSAM will select bonds for the fund through its proprietary sustainable investing framework. Although the fund does not yet commit to aligning fully with the EU Taxonomy for sustainable economic activities, it is designed to integrate various green bond frameworks, third-party data, industry standards, and internal biodiversity metrics. The firm indicated that this alignment would be reviewed as EU regulations evolve and data availability improves.
Additionally, the fund will exclude companies with significant exposure to activities that contradict its sustainability objectives, including those involved in fossil fuel extraction and high greenhouse gas emissions. It will also avoid companies engaged in controversial activities, such as the extraction and production of thermal coal, arctic oil, and gas.
To maintain its sustainability focus, the fund will undergo regular monitoring, with quarterly updates ensuring that any investments failing to meet the sustainable criteria are divested. This makes the biodiversity fund Goldman Sachs’ fifth green bond fund.
The fund is domiciled in Luxembourg and listed on EU markets. While there are currently 24 biodiversity funds in Europe, only four are available outside the region, suggesting a nascent global demand for pure-play biodiversity funds. As investor interest in biodiversity grows, Goldman Sachs’ launch is poised to serve as a key example of how fixed-income products can contribute to conservation efforts while delivering financial returns.
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