Goldman Sachs Enlists Paul Tudor Jones Non-Profit on ESG ETF

(Bloomberg) -- Goldman Sachs Group Inc. may not be the first name people think of when it comes to values-oriented investing. But the Wall Street titan is hoping to change that with its latest exchange-traded fund -- and a little help from billionaire Paul Tudor Jones.

The lender’s asset management arm is starting an ETF that only invests in U.S. companies that engage in “just business behavior,” as defined by the JUST Capital Foundation, a non-profit organization co-founded by Jones, according to a regulatory filing.

With socially responsible investing -- also known as ESG for its focus on a company’s environmental, social or governance policies -- surging to more than $23 trillion globally, ETF issuers are looking to get a piece of the action. At least nine funds started this year offer exposure to values-based strategies, but assets have disappointed to date. ESG-related ETFs house less than $6 billion in the U.S., or 0.2 percent of the market, data compiled by Bloomberg show.

Millennial Appetite

Goldman Sachs’s new fund will vie with values-based ETFs from BlackRock Inc., the largest ETF issuer in the U.S., State Street Corp., Nuveen Investments and OppenheimerFunds Inc., among others.

The lender said earlier this year it had surpassed $10 billion in assets tied to ESG investing strategies, up from about $200 million when it acquired impact investing boutique Imprint Capital in 2015.

Even non-issuers are looking to get a slice of the pie with Morgan Stanley, for example, creating ready-to-go thematic portfolios for sustainability and gender diversity on its new robo-advice platform. Its research showed 86 percent of millennials are interested in socially-responsible investing, according to a press statement.

The Goldman Sachs JUST U.S. Large Cap Equity ETF will track an index based on annual rankings of corporate behavior compiled by JUST Capital, the filing shows.

To create these rankings, JUST surveys Americans to determine what issues define “just” business behavior, and how much weight these factors merit. This year’s components included worker issues such as a living wage and safe workplace, and customer concerns such as privacy protection and truthful advertising, according to JUST’s website.

--With assistance from Emily Chasan

To contact the reporter on this story: Rachel Evans in New York at revans43@bloomberg.net.

To contact the editors responsible for this story: Jeremy Herron at jherron8@bloomberg.net, Eric J. Weiner

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