• Goldman Sachs Asset Management (GSAM) is launching its first biodiversity-focused bond fund, offering fixed-income investors a way to support nature conservation.
• The fund aims to reach $300 million to $500 million in assets over the next three to five years, investing in corporate bonds linked to biodiversity impact.
• Biodiversity finance is gaining momentum, particularly in Europe, while challenges remain in the U.S. due to shifting sustainability policies.

Driving Biodiversity Investment

Goldman Sachs Asset Management is introducing its first biodiversity-focused bond fund, expanding sustainable finance options for fixed-income investors.

“Most of the existing biodiversity or nature-based solutions funds are equity or private equity and credit-focused, so we wanted to give investors the possibility to do something in terms of biodiversity on the liquid fixed income side,” said Bram Bos, global head of green, social, and impact bonds at GSAM.

What the Fund Offers

The Goldman Sachs Biodiversity Bond Fund will hold 40 to 70 investment-grade corporate bonds across developed and emerging markets. 20% of the fund will consist of bonds labeled for biodiversity-related activities such as forest restoration. The rest will be general-purpose bonds from companies supporting nature conservation, such as waste management firms.

GSAM said the fund will be registered under Article 9, the EU’s strictest Sustainable Finance Disclosure Regulation (SFDR) category. It will seek to match the performance of the Bloomberg Global Corporate Index.

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Market Demand and Growth

Interest in biodiversity finance is expanding, especially among private investors. “This is a growing market,” Bos said. “A lot of clients want to do something with it.” However, he noted that “by far the biggest demand is in Europe.”

U.S. Sustainability Challenges

The U.S. market presents hurdles for biodiversity finance. “The U.S. is in a more complex environment at the moment in terms of sustainability,” Bos said. Despite this, GSAM sees “good momentum” in regions such as the Middle East and Asia.

The firm anticipates U.S. policy shifts could impact the labeled bond market, with companies potentially delaying green bond issuance. But, according to Bos, “a lot of the lower supply that may come from the U.S. will likely be offset by positive impacts from other parts of the world where the theme is really gaining a lot of momentum.”

The Bigger Picture

The fund launch coincides with global biodiversity negotiations in Rome, where representatives from 150 nations are working to secure $200 billion annually for nature protection by 2030.

Biodiversity finance remains one of the most complex areas of environmental, social, and governance (ESG) investing. BloombergNEF estimates that sustainable bond issuances “with the potential” to aid biodiversity reached $235 billion through August last year. However, tracking biodiversity impact remains a challenge.

“Governments have been by far the largest issuers of such debt,” said Jameson McLennan, a research analyst at BNEF. “The skew is likely due to the nature of these types of projects, which aren’t typically revenue-generating and may be difficult for other issuer types to finance.”

Looking Ahead

GSAM has secured an anchor investor for the fund but has not disclosed details. The product will be housed within GSAM’s fixed-income unit, which manages $1.75 trillion in assets. Investors can diversify across multiple currencies, including the dollar, euro, and pound sterling.

With growing private sector interest and international momentum in biodiversity finance, GSAM’s new fund could help push biodiversity investing further into mainstream fixed-income markets.

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