Environmental Investment Can Pay Dividends says Mark Tercek
May 2008
STANFORD GRADUATE SCHOOL OF BUSINESS —There are “huge opportunities for companies and other private sector players in the environmental area,” said Mark Tercek, an investment banker who spent the past 24 years at global giant Goldman Sachs. “We’re off to the races there.”
Tercek outlined Goldman Sachs’ efforts to encourage its business partners to adopt sustainable practices. His talk on April 24 was part of a lecture series organized by the student Environmentally Sustainable Business Club, at the Graduate School of Business.
As the head of Goldman Sachs’ Center for Environmental Markets, created in 2005, Tercek has overseen the company’s effort to match environmentally friendly policies with profitable business practices. The center also works with think tanks and academic institutions to develop ways to link environmental conservation with business.
It started in September 2004, when Goldman Sachs and the Wildlife Conservation Society announced a partnership to protect a tract of wilderness at the southernmost edge of South America, on the island of Tierra del Fuego, Chile. This first-of-its-kind private/public alliance has created a 735,500-acre nature preserve, donated by Goldman Sachs to the Wildlife Conservation Society to be protected as a major ecological resource. Goldman Sachs and the society are working with Chilean conservationists and other partners to establish the reserve, develop a sustainable use plan, and preserve the region’s unique ecological characteristics.
Goldman Sachs vowed to invest $1 billion in renewable energy and energy efficiency projects. By the end of 2007, it had invested more than $2 billion in alternative energy projects in the United States, Europe, and Asia, according to Goldman Sachs’ corporate website, including the Maryland-based solar photovoltaic power firm SunEdison and Texas-based Horizon Wind Energy.
Another corporate goal, Tercek said, is to reduce greenhouse gas emissions from the company’s leased and owned offices companywide by 7 percent by 2012, using 2005 as the baseline.
That effort is proving tricky to achieve because in both 2006 and 2007, the company’s emissions rose as overall business grew. “Not only have our emissions not gone down, they have soared,” said Tercek. “Business is booming, so that’s good. But we have a little bit of a problem. We have to figure out how to have great data centers that never fail, but have more energy efficiency.”
Another visible example of Goldman Sach’s commitment to go green is the company’s new headquarters, a 43-story steel-and-glass office tower under construction in New York across from the World Trade Center site to house the company’s investment banking, investment management, and trading operations.
Tercek said Goldman Sachs also is active in the markets for carbon emissions. In September 2006, it made a minority equity investment in Climate Exchange PLC, which owns several European and U.S. trading platforms that facilitate trading in environmental financial instruments: the European Climate Exchange (ECX), the Chicago Climate Exchange (CCX) and the newly created California Climate Exchange (CaCX), the company’s Web site says.
Big firms are betting that a carbon trading market could develop in the United States. “So, everyone’s paying attention to this space,” Tercek said, adding, “It’s a tricky game to play because there is a lot of uncertainty.”
A few weeks after his talk at the Business School, Tercek announced he would combine his global business experience and passion for environmental issues when he takes the helm this summer as chief executive of the Nature Conservancy, the nation’s largest environmental-conservation charity.
Tercek, 51, starts at the Arlington, Va.–based Nature Conservancy in July 2008, according to a release issued by the nonprofit on May 9. He joined Goldman Sachs in 1984 and became a partner at the company in 1996.
—Michele Chandler