A Proposed Quantitative ESG Framework for Financial Companies——Take Goldman Sachs Group, Inc as an Example

In recent years，as ESG(Environmental, Social and Governance) factors, which when integrated into investment analyses and portfolio constructions, may offer investors potential long-term performance advantages，many professional investors begin to pay more and more attention to ESG reports and take these reports as a means of helping to identify companies with superior business models. Although there are several professional rating agencies who prepare ESG reports for big companies like JP Morgan Chase, Bank of America, Goldman Sachs, and etc., none of these ratings are purely quantitative or are especially designed for financial companies (Betty Moy Huber and Michael Comstock, Davis Polk & Wardwell, July 27, 2017)[1]. As for ESG report users, a descriptive ESG report with only relative information is not practical enough when investors want to compare the ESG performances between numerous companies and it is not accurate to value various kinds of companies by using the same framework. Therefore, a quantitative ESG framework for financial companies needs to be established.