Progress is everyone’s business

2010 Environmental, Social and Governance Report ­ Business Principles

Our clients’ interests always come first. Our experience We make an unusual effort to identify and recruit the We consider our size an asset that we try hard to pre- shows that if we serve our clients well, our own success very best person for every job. Although our activities serve. We want to be big enough to undertake the will follow. are measured in billions of dollars, we select our peo- largest project that any of our clients could contem- ple one by one. In a service business, we know that plate, yet small enough to maintain the loyalty, the without the best people, we cannot be the best firm. intimacy and the esprit de corps that we all treasure Our assets are our people, capital and reputation. If and that contribute greatly to our success. any of these is ever diminished, the last is the most difficult to restore. We are dedicated to complying fully We offer our people the opportunity to move ahead with the letter and spirit of the laws, rules and ethical more rapidly than is possible at most other places. We constantly strive to anticipate the rapidly changing principles that govern us. Our continued success Advancement depends on merit and we have yet to find needs of our clients and to develop new services to meet depends upon unswerving adherence to this standard. the limits to the responsibility our best people are able those needs. We know that the world of finance will not to assume. For us to be successful, our men and stand still and that complacency can lead to extinction. women must reflect the diversity of the communities Our goal is to provide superior returns to our sharehold- and cultures in which we operate. That means we must ers. Profitability is critical to achieving superior returns, attract, retain and motivate people from many back- We regularly receive confidential information as part building our capital, and attracting and keeping our grounds and perspectives. Being diverse is not of our normal client relationships. To breach a confi- best people. Significant employee stock ownership aligns optional; it is what we must be. dence or to use confidential information improperly or the interests of our employees and our shareholders. carelessly would be unthinkable.

We stress teamwork in everything we do. While indi- We take great pride in the professional quality of our vidual creativity is always encouraged, we have found Our business is highly competitive, and we aggr­ essively work. We have an uncompromising determination to that team effort often produces the best results. We seek to expand our client relationships. However, we achieve excellence in everything we undertake. Though have no room for those who put their ­personal inter- must always be fair competitors and must never deni- we may be involved in a wide variety and heavy vol- ests ahead of the interests of the firm and its clients. grate other firms. ume of activity, we would, if it came to a choice, rather be best than biggest. The dedication of our people to the firm and the Integrity and honesty are at the heart of our business. intense effort they give their jobs are greater than one We expect our people to maintain high ethical stan- We stress creativity and imagination in everything we finds in most other organizations. We think that this is dards in everything they do, both in their work for the do. While recognizing that the old way may still be the an important part of our success. firm and in their personal lives. best way, we constantly strive to find a better solution to a client’s problems. We pride ourselves on having pioneered many of the practices and techniques that have become standard in the industry.

c2 Goldman Sachs ESG Report 2010 Table of Contents

Letter from the Chairman and CEO 2

Our activities, our clients and our impact 3

Our Firm 4 About Goldman Sachs Our business standards and practices Clients: our roles and responsibilities Our commitment to shareholders Our role in public policy and regulatory reform Our approach to thought leadership

Our Approach to Governance Issues 9 Our Board of Directors Our approach to compensation Our approach to risk management About This Report Our Approach to Social Issues 15 Our responsibility for good governance Our commitment to our people and an appropriate approach to social and Our approach to diversity and inclusion Our approach to vendor engagement environmental issues begins with our Our approach to philanthropy business and extends to the communities where we live and work. As a result, this report Our Approach to Environmental Issues 23 begins with a discussion about our firm prior Our business initiatives to discussing environmental, social and Our operational impact Our thought leadership governance issues. In drafting the report, we Highlights of environmental progress since 2005 have referenced the Global Reporting Initiative’s G3 Guidelines to identify the key Awards and Recognitions 27 issues to be covered. More information on Contact 28 the Global Reporting Initiative is available on its Web site at globalreporting.org.

This report covers January 1, 2010 through December 31, 2010 unless otherwise noted. More detailed and current information related to content in this report is available on our Web site at goldmansachs.com.

Goldman Sachs ESG Report 2010 1 Letter from the Chairman and CEO

Lloyd C. Blankfein Chairman and Chief Executive Officer

I am pleased to present our inaugural In serving our clients around the world, we act in We believe that we have an obligation to conduct different capacities: advisor, financier, market maker, our business with integrity in order to foster the trust Environmental, Social and Gover- co-investor and asset manager. In these roles, we take that underpins the willingness of our clients to do nance Report, a compendium of the a disciplined approach to matching the capital of our business with us and, more broadly, the long-term various ways in which Goldman Sachs investing clients – who aim to grow the savings of stability and vitality of the financial system. In this millions of people – with the needs of our corporate regard, we continue to be focused on the lessons helps to create value for clients, inves- and government clients – who rely on financing to learned from the financial crisis and have undertaken tors and the markets and communities preserve growth, create jobs and deliver products a number of initiatives, including a comprehensive in which we operate. and services. review of our business standards and practices, and a firmwide effort to implement the recommendations Economies need strong, healthy financial institu- that emanated from that review. tions to help drive growth and innovation. Our firm is both a catalyst for and a beneficiary of a growing I invite you to review this Report, which reflects, economy – our mission is to help spur global growth in part, our commitment to responsibly addressing and provide strong relative performance for our environmental, social and governance issues. A com- shareholders. Our focus on environmental, social mittee of our Board of Directors will periodically and governance issues is an important part of this. review this Report and its implementation. We wel- come your feedback. Our responsibility for good governance, and an appropriate approach to social and environmental issues begins with our business and extends to the communities where we live and work. Our commit- ment to the ongoing training and development of our employees is fundamental to the sustainability Lloyd C. Blankfein of our business. Chairman and Chief Executive Officer

2 Goldman Sachs ESG Report 2010 Our Activities, Our Clients and Our Impact

Our Activities Our Clients Our Impact

• Provide strategic advice to our clients related to mergers, acquisitions, • Corporations • With sound advice, clients realize value by acquiring other businesses or by Investment divestitures, corporate defense activities, risk management, restructurings selling or divesting all or a portion of their businesses Banking • Financial institutions and spin-offs • Financial sponsors • Timely and efficient access to debt and equity capital enables companies to • Help clients execute large, complex transactions for which we provide position their businesses for growth and expansion while managing risks • Governments, states multiple services, including “one-stop” acquisition financing and cross-border and municipalities • Governments utilize debt financings to fund infrastructure and other projects structuring expertise to promote economic growth • Assist our clients in managing their asset and liability exposures and their capital • Help companies raise capital to fund their businesses through domestic and cross-border public offerings and private placements of a wide range of ­securities and other financial instruments

• Offer market expertise, provide prices and facilitate client transactions in • Corporations • Market makers provide liquidity and play a critical role in price discovery, Institutional fixed income, equity, currency and commodity products which contributes to the overall efficiency of the capital markets Client • Financial institutions Services • Make markets in and clear client transactions on major stock, options and • Hedge funds, mutual • Companies and institutions are able to purchase financial instruments futures exchanges worldwide funds, pension funds and that help them manage their risks – active risk management supports • Distribute investment research, trade ideas, market information and analysis other investment funds economic growth to our clients • Foundations • Engage in insurance activities where we reinsure and purchase portfolios of • Governments, states insurance risk and acquire pension liabilities and municipalities • Provide financing, securities lending and other prime brokerage services to institutional clients including mutual funds, hedge funds, pension funds and foundations

• Invest, typically longer-term, directly and indirectly through funds that we • Corporations • We provide capital to clients to fund growth and innovation Investing manage, in debt securities, loans, public and private equity securities, real and • High-net-worth individuals Lending estate, wholly owned investment companies and power generation facilities • Provide credit to corporate clients through loan facilities and to high-net-worth individuals through secured loans

• Provide investment management services and offer investment products • Institutions • Investment and wealth advisory services help clients preserve and grow their Investment (primarily through separately managed accounts and commingled vehicles, financial assets Management • Retail investors who such as mutual funds and private investment funds) across all major access our products • Successful investing over time creates wealth by providing our clients with asset classes through a network of solid investment returns • Provide customized investment advisory solutions and wealth advisory third-party distributors • We provide advice and guidance to our institutional and individual clients services, including income and liability management, trust and estate • High-net-worth individuals on managing risk and allocating assets in their portfolios with the goal of planning, philanthropic giving and tax planning ­providing them with solid investment returns to create wealth • Clients can make investments through Investment Management products to help achieve their financial goals and preserve or grow their financial assets to provide day-to-day working capital, fund future business expansion, manage employee benefit plans or save for milestones like college and retirement

* For additional details, please see our 10K at: www.goldmansachs.com/shareholders Goldman Sachs ESG Report 2010 3 Our Firm

preserve and grow their financial assets. We recog- About ­Goldman Sachs nize that to serve our clients more effectively, we • Founded in 1869 as a partnership and must help them identify and address the challenges became a public company in 1999 The ­Goldman Sachs Group, Inc. is a leading global they face, including the environmental and social investment banking, securities and investment man- • Maintains offices in all major global trends that affect them. Similarly, environmental and agement firm that provides financial services to a financial centers social issues are becoming increasingly important diversified client base that includes corporations, elements in our ability to recruit and retain the most • Employs 35,700 people financial institutions, governments, and high-net- talented people, to protect the capital invested in • Net revenues of $39.2 billion for 2010 worth individuals. ­Goldman Sachs is headquartered our business and to strengthen our reputation as an in New York and maintains offices in major financial • Total commitments to charitable and small industry leader. centers around the world. As of December 2010, business initiatives in excess of $1 billion we had offices in over 30 countries, and 44% of since 2009, including $820 million to our We work with regulators and governments to pro- our staff was based outside the Americas. In 2010, donor-advised fund ­Goldman Sachs Gives mote legislative and regulatory guidelines that will we generated 45% of our net revenues outside improve our industry’s ability to serve our clients the Americas. and contribute to economic growth and the stability of the financial system. We engage with communities essential for earning the trust and confidence of We perform a broad range of advisory, financing around the globe through environmental, social and clients, stakeholders and the public. and market-making services to help clients invest governance practices, in addition to comprehensive and raise funds, transact in various types of financial philanthropic efforts. To uphold these values, we strive to recruit and retain products and manage risk to protect their assets. the most talented performers in our industry and In our roles as advisor and financier, we enable beyond. We invest in training and developing our companies to raise capital to strengthen and grow people, and expect the firm’s leaders to set an example businesses. As market maker and risk manager, we Our Business Standards and Practices for others. Our values are articulated in our Business primarily help institutions that are professional mar- Principles (inside front cover; www.goldmansachs.com/ Our Business Principles, the foundation of our cul- ket participants (including governments, corpora- businessprinciples ), which were codified 30 years ture of client service, teamwork, excellence, personal tions and investing institutions) buy and sell financial ago to define the firm’s fundamental expectations for initiative and accountability, are fundamental to our instruments to realize their investment objectives. how our people should work with clients, manage our long-term sustainability and success. These values, As asset manager, we help companies, pension businesses and engage with colleagues. funds, mutual funds, individual investors and others which stem from our history as a partnership, are

4 Goldman Sachs ESG Report 2010 Our Firm

The financial crisis and its aftermath have been a time an increasingly complex environment, and making product suitability. It also means we must always be of reflection and reform for our firm. We created our our firm a better institution. Our business practices clear to ourselves and to our clients about the capacity Business Standards Committee in the spring of 2010 and standards cannot be static; we must continu- in which we are acting – whether as advisor, financier, to conduct an extensive review of our business stan- ally improve them to keep raising our standards to a market maker, co-investor or asset manager – and dards and practices. As part of that effort, our senior higher level. the responsibilities we assume with each role. The management and Board of Directors engaged in a chart on page 6 outlines these activities as well as our thorough self-assessment and effort to improve our To read the Business Standards Committee report responsibilities to our clients in each of these roles. practices. This eight-month review encompassed every and recommendations, visit: www.goldmansachs.com/ major business, region and activity of the firm. The businessstandards. Committee issued a report that examined six areas Our Commitment to Shareholders in detail in light of the events and developments of recent years: Clients: Our Roles and Responsibilities The ability of Goldman Sachs to deliver strong returns over the long term has been, and will continue to be, • Client Relationships and Responsibilities Since the founding of ­Goldman Sachs in 1869, we dependent on the trust and confidence of our clients • Conflicts of Interest have been a client-driven firm. The commitment to and our shareholders. Our responsibility to advance our clients is reflected in our first Business Principle, their interests – by meeting clients’ demands and by • Structured Products which reads, “Our clients’ interests always come first.” creating long-term value for our shareholders – is con- • Transparency and Disclosure The core client service values of integrity, fair dealing, sistent with our obligation to promote financial stabil- transparency, professional excellence, confidential- ity and progress more broadly. The benefits of strong • Committee Governance ity, clarity and respect are embedded throughout our financial performance accrue not only to Goldman • Training and Professional Development Business Principles, and express how we intend to Sachs stakeholders, but also to the local and macro conduct ourselves with every client interaction. economies in which we operate. Healthy, vibrant and The Committee’s work relied in part on a survey of thriving financial institutions are critical to supporting more than 200 of our clients worldwide that included In recent years, our business has evolved and become sustainable economic growth. At the same time, the critical feedback and suggestions for strengthening more complex. We recognize that this complexity ability of financial firms to allocate capital efficiently relations and improving trust. The report’s recom- gives rise to the potential for conflicts of interest, and and drive innovation is directly tied to the underlying mendations have been a catalyst for change at the requires a robust suitability process. As a result, health and vitality of the markets in which they firm. The implementation of the recommendations this requires ongoing diligence to ensure client and operate. In this way, the interests of financial institu- is deepening our connections with clients and stake- tions, clients, shareholders and economies-at-large holders, strengthening our business and culture in are inextricably linked.

Goldman Sachs ESG Report 2010 5 Our Role-Specific Client Responsibilities

Advisor Role Activities Basic Responsibilities

Banking Advisor • Act as an advisor as agreed with client in engagement letter • Provide our best advice • Act as an advisor on an informal, client service basis with no engagement letter in place • Disclose conflicts • Assist client in reviewing alternatives on their merits • In some jurisdictions, fiduciary duties apply

Fiduciary Role Activities Basic Responsibilities

Asset and Private Wealth Manager • Advise on asset allocation, portfolio construction and manager or securities selection • Provide our best advice • May invest on a discretionary basis • Disclose conflicts • May assist in reviewing investment alternatives on their merits • Fiduciary duties apply, although not in all jurisdictions

Market Participant Role Activities Basic Responsibilities

Market Maker / Counterparty (Principal) • Make markets by committing capital • Communicate clearly our role as principal • Provide investing ideas • Stand ready to buy and sell regardless of whether the other side of the transaction • Make our inventory available or add to our inventory is available • Set pricing to reflect market conditions • Fulfill applicable suitability and other pre- and post-transaction responsibilities

Broker • Execute transactions for the account of clients • Provide best execution • Provide investing ideas • Arrange adequate protection of client assets for which we are responsible • Provide advice incidental to acting as broker • Fulfill applicable suitability and other pre- and post-transaction responsibilities

Underwriter / Structurer Role Activities Basic Responsibilities

Underwriter / Product Structuring • Structure and execute underwritings, distributions or loan syndications • Conduct appropriate and thorough due diligence on issuer and / or structure, as applicable • May make or buy loans, or buy securities or other instruments, and issue / sell securities • Disclose conflicts that are based upon those assets • Endeavor to ensure there is no material misstatement / omission in disclosure • Assist in preparing disclosure and conduct marketing • Fulfill applicable suitability obligations • Recommend pricing to reflect relevant issuer- and market-related factors, including • In underwritings in which the issuer or selling shareholder participates in selling efforts, investor demand, when making a broad distribution make allocations explicitly taking into account their interests and expressed preferences • Generally make secondary trading market

6 Goldman Sachs ESG Report 2010 Our Firm

As part of this commitment to transparency, we have commitment to improving our communications on Our success depends on the strength of our client taken a number of steps to improve our communica- issues of interest to our shareholders. and shareholder relationships. To build and sustain tions with external constituents: this trust, we are committed to transparency and To view and download shareholder materials and to maintaining an open dialogue with shareholders. • We revamped our financial reporting information, please visit: www.goldmansachs.com/ We view this flow of information and feedback as shareholders. absolutely critical. Through investor engagement, • We enhanced our disclosure to improve the level client meetings, and employee surveys, our senior of understanding of the drivers of our business as management and our Board of Directors stay abreast well as our approach to managing the risk associ- 2000–2010 Performance Metrics of concerns and are therefore better informed with ated with facilitating our clients’ needs respect to setting and directing the firm’s focus. • We revised our Proxy Statement for the 2011 GOLDMAN SACHS Annual Meeting of Shareholders to make it more user-friendly 19.3% PEER AVERAGE Our Role in Public Policy and 14.9% • We also filed two supplementary presentations Regulatory Reform with the Securities and Exchange Commission to 11.2% help those making voting decisions better under- 8.1% ­Goldman Sachs supports public policy that fosters stand our corporate governance practices and our global economic growth, promotes financial sta- approach to compensation for 2010 2.3% bility, and improves communities and society. As such, we have a responsibility to understand the In addition to these changes, we contacted more than regulatory and political environments in which we 200 of our largest shareholders in the months lead- have a presence, and to advocate policies we believe ing up to our 2011 Annual Meeting to discuss any advance and protect our stakeholders’ interests -6.9% governance concerns they may have. Throughout the AVERAGE BVPS CAGR EPS CAGR and the broader marketplace. In this way, we seek past year, members of our Board of Directors have ANNUAL ROE to be a constructive voice in the global financial held discussions with shareholder groups to address ­regulatory reform process and are working with 1 Peer average comprised of JPM, MS, C, and BAC. FY2000 ROE for GS is pro forma as previously dis- topics ranging from corporate governance to the closed; 2008 compensation expenses exclude 4Q 2008 severance costs of approximately $275mm. regulators to strengthen the financial system and recommendations issued by our Business Standards 2 Excludes BAC due to a negative 2010 EPS. reduce systemic risk, while supporting dynamic Committee. All of these steps demonstrate the firm’s C capital ­markets, entrepreneurship and innovation.

Goldman Sachs ESG Report 2010 7 Our Firm

The financial crisis highlighted, among other things, and viewpoints. Whenever possible, we leverage our certain shortcomings in financial regulation and Our Approach to Thought Leadership intellectual capital and relationships to offer unique important measures are being enacted to address programs and events to benefit our clients, our people We are dedicated to developing and sharing new these areas. Both globally and in the U.S., there are and society more broadly. insights into industries and global markets. While comprehensive changes to regulations governing working with our clients to help them realize their financial systems. The goals of regulatory reform – For more information about our thought leadership objectives, we are also focused on helping to cata- strengthening the industry’s financial standing, pro- related to issues such as demographic change, educa- lyze and shape a productive debate across markets viding greater transparency, and limiting the prob- tion and health, and long-term investment perspec- and industries. We convene experts able to foster ability and potential impact of future shocks – are tives, visit: www.goldmansachs.com/ideas. collaboration on solutions to major global issues, in everyone’s best interest. Given the important role ranging from public health and alternative energy to that financial institutions play in the free flow of accounting policy and financial regulation. Our own capital, a dynamic and stable financial sector is criti- experience in forging partnerships across the public cal to long-term global development. and private sectors allows us to play a meaningful role in conversations about many of the most sig- For more information on our public policy efforts, nificant issues facing the world today. We often are visit: www.goldmansachs.com/publicpolicy. sought for our insights and analysis on regulatory matters and for original research on global economic For more information on our views regarding challenges. As an example, we develop and present regulatory reform, visit: www.goldmansachs.com/ new perspectives on global markets and industries regulatoryreform. to help inform the discussion through our Global Investment Research division’s research products and Goldman Sachs Asset Management’s white papers

8 Goldman Sachs ESG Report 2010 Our Approach to Governance Issues our approach to governance issues

Strong and sustainable performance ­­Goldman Sachs’ Board of Directors and manage- • Effective risk management sustained by group ment team have long recognized the importance of accountability and extensive communication cannot be achieved without sound corporate governance practices that promote effec- – We recognize that, as a financial services governance. Our ability to advance tive oversight and strong accountability. The key company, we must assume risk in order to tenets of our approach to governance today include: the interests of our clients and share- meet our clients’ needs

holders is grounded in our governance • Long-term orientation – We emphasize escalation and communication structure – including the disciplined – Our focus is the long-term prosperity of our – We have independent control functions oversight and broad-based sense of clients, shareholders, employees and the markets – We are disciplined in our mark-to-market accountability that has been a hall- and communities we serve accounting mark of the firm’s partnership culture. – Our long-term orientation is supported by our – We recruit, develop and retain sophisticated risk compensation and promotion policies Rather than emphasizing hierarchies, management professionals – A significant portion of compensation for senior – We invest consistently in processes and systems we are an organization that is bound employees is in the form of equity-based com- together by jointly held values and a pensation with long retention requirements • Commitment to service – Our employees and the firm are committed to sense of mutual accountability, rein- • Teamwork and accountability community service forced by regular training of our peo- – We have a flat organizational structure built on mutual accountability and meritocracy – We support employee-driven ­volunteering and ple on the firm’s core values. philanthropic programs, including Community – Our compensation policies, which reward firm TeamWorks and ­Goldman Sachs Gives performance first, followed by divisional and individual performance, encourage teamwork and group accountability

10 Goldman Sachs ESG Report 2010 our approach to governance issues

that is effective, collegial and responsive to the needs Our Board of Directors of ­Goldman Sachs. All Directors are elected annually, 2010 Board of Directors Highlights with a majority vote standard, for a one-year term Our Board consists of 11 Directors, nine of whom • 100% independent Board standing expiring at our Annual Meeting of Shareholders the meet the New York Stock Exchange (NYSE) committees following year. Biographies of our Board members are rules on independence. Independence is essen- available at www.goldmansachs.com/leadership • Independent Presiding Director reviews tial for the overall oversight of our business as it and in our Proxy Statement. and approves Board meeting agendas and enables our Directors to communicate more objec- materials and is available for direct commu- tive and critical views about our activities. The We believe it is important for each Director to have nication with shareholders two Executive Directors are Chairman and Chief a financial stake in the company to help align the Executive Officer Lloyd C. Blankfein, and Presi- • Independent Directors regularly meet in Director’s interests with those of our shareholders dent and Chief Operating Officer Gary D. Cohn. executive sessions and to foster accountability. We require all non- In assessing Director independence, the Corporate employee Directors to own at least 5,000 shares of • Board reviews leadership structure at least ­Governance and Nominating Committee and our common stock and/or fully vested restricted stock annually and has flexibility to change struc- Board rely upon our Director Independence Policy units within two years of becoming a Director. In ture at any time www.goldmansachs.com/governancepolicies. addition, all restricted stock units granted to a Direc- • Directors paid only in restricted stock units with Additional information on independence is included tor must be held throughout the Director’s tenure on requirement to hold throughout their tenure in our Proxy Statement www.goldmansachs.com/ the Board. shareholders. • Average tenure of 7 years among current Board

Board Leadership and Succession Planning • Holders of 25% of shares can call a The Corporate Governance and Nominating Com- special meeting mittee selects Directors for their judgment, character, ­Goldman Sachs’ current leadership structure com- expertise, diversity of background, gender, race, bines the position of Chairman and Chief Executive • No poison pill culture, geography and business experience, among Officer and maintains an independent director as • Majority voting policy for election of Directors others – all of which are essential for effectively over- Presiding Director. Our Board does not have a policy seeing our business. The Corporate Governance and on whether the roles of Chairman and CEO should • Director attendance averaged 98.5% in Nominating Committee also evaluates each Direc- be separate or combined. Our Board assesses these 2010 for Board and committee meetings tor’s knowledge, skills and experience in relationship roles and determines the merits of each leadership to other Board members in order to build a Board structure to ensure it is appropriate at any given

Goldman Sachs ESG Report 2010 11 our approach to governance issues

time. In March 2011, our Board adopted amend- and practices primarily through its Risk Commit- ments to our Corporate Governance Guidelines to tee, which was established in September 2010 and Historic Performance Compensation Flexibility: Net Revenues and Compensation provide that the review of our leadership structure consists of all of our independent Directors. Prior Ratio since IPO will occur at least annually to enhance the effective- to the formation of the Risk Committee, the Audit Our compensation is designed to pay for performance; in 2006, 2007, ness of the review process and to help to clarify the Committee was responsible for this function. We 2009 and 2010, our most pro table years, our compensation ratios important role of our Presiding ­Director. believe the Board and the firm benefit from a com- were four of the lowest in the rm’s history as a public company². mittee that focuses specifically on risk-related issues To safeguard the stability of our management team, and our firm’s risk management structure. The Risk NET REVENUES ($BN) our Board, through the Corporate Governance and Committee regularly reviews and discusses with $50 75% 46% AVERAGE COMP Nominating Committee, along with our CEO, has management our aggregate risk exposures and key RATIO SINCE IPO 40 65% developed comprehensive executive succession plans, information relating to our funding and liquidity COMPENSATION RATIO which are reviewed annually. Our Board also meets position. In the course of these reviews, the Risk 30 55% regularly with senior managers from the firm’s global Committee works closely with our Chief Financial offices. To read our Corporate Governance Guidelines, Officer and General Counsel, as well as with our 20 45% visit: www.goldmansachs.com/governancepolicies. Chief Risk Officer and other key risk management executives. 10 35% Board of Directors Committee Structure 0 25% Our Board of Directors is composed of four standing For information about the purposes and respon- 99 00 01 02 03 04 05 06 07 08 09 10 committees: sibilities of our individual Board committees and

committee charters, visit: www.goldmansachs.com/ 1 Compensation ratio is defined as compensation and benefits expenses divided by net revenues. Compensation amounts for 1999 reflect results for the FY ended November 1999. Compensation • boardcommittees. Audit Committee ratio in 2008 excludes 4Q 2008 severance costs ofB approximately $275mm. Compensation ratios include employee initial public offering and acquisition award expenses, if any, except for nonrecur- • Compensation Committee ring employee initial public offering and acquisition award expenses in 1999 and 2000 of $2,257mm and $290mm, respectively. In accordance with U.S. GAAP, options granted for fiscal 2003 and • Corporate Governance & Nominating Committee subsequent years are included in compensation expense. Compensation expense in 2010 excludes Our Approach to Compensation UK bank payroll tax. • Risk Committee 2 In 2008, no Named Executive Officer discretionary compensation awarded Our approach to compensation aligns the The Board of Directors plays an important role in long-term interests of our people with those reviewing and approving risk management policies of our shareholders.

12 Goldman Sachs ESG Report 2010 our approach to governance issues

We believe effective compensation practices should: Our Compensation Committee is committed to pay- 2010 Named Executive Officer ing for performance. All of our employees, including (NEO) Compensation Highlights • Encourage teamwork and communication, binding our senior executives, are evaluated and receive feed- individual short-term interests to the institution’s back as part of the same annual 360-degree review • For 2010, the Compensation Committee awarded long-term interests process that is used with all of our employees. This our NEOs 70% of their variable compensation in process includes extensive narrative feedback from a the form of equity-based awards, with the remain- • Evaluate performance on a multi-year basis wide range of colleagues on a confidential basis. der in cash to align the interests of the NEOs with • Discourage excessive or concentrated risk-taking those of our shareholders • Allow an institution to attract and retain To learn more about our compensation, visit: • Our average mix of variable compensation from proven talent www.goldmansachs.com/compensation. 2003–2010 was two-thirds in equity and one- third in cash • Align aggregate compensation for the firm with performance over the cycle • A significant portion of shares underlying Our Approach to Risk Management restricted stock units are non-transferable for an To read and download our Compensation Principles, extended period Effective risk management protects our firm, our visit: www.goldmansachs.com/compensation. • All equity-based awards are subject to forfeiture or shareholders, and our clients, while also contributing to the stability of the financial system. Our rigor- recapture by the firm. For 2010, we added new Our Compensation Committee recognizes that it ous risk management process allows us to monitor, forfeiture provisions that are triggered upon sig- is fundamentally important for our compensation nificant deterioration of our firm’s financial evaluate and manage the risks we assume in con- program to be consistent with enhancing the safety condition ducting our activities. These risks include market, and soundness of our firm. Throughout the year, credit, liquidity, operational, legal and reputational • 75% of the after-tax shares received as the Compensation Committee regularly reviews exposures. Our risk management framework is built compensation must be retained throughout each and receives updates on the design and function of around three core components: governance, processes NEO’s tenure our compensation program. The Committee con- and people. (See table on page 14.) • There are no employment agreements that provide siders our absolute and relative financial perfor- for severance or “golden parachute” payments mance, for example by looking at key operational Following the financial crisis, reputational risk man- metrics, including return on average common • agement has assumed greater importance than ever NEOs are prohibited from hedging any equity- shareholders’ equity. based compensation or shares of our common before. Our Board is keenly focused on reputational stock, including those they can freely sell risk management, as is each Committee of our Board.

Goldman Sachs ESG Report 2010 13 our approach to governance issues

Risk Management Framework

• Risk management governance starts with our Board, which plays an important role in reviewing and The Board and executive management are ultimately Governance approving risk management policies and practices responsible for the management and control of risk • At the most senior levels of the firm, our leaders are experienced risk managers, with a sophisticated at the firm. They are supported by a variety of busi- and detailed understanding of the risks we take ness committees, departments and systems that are • We maintain strong communication about risk and we have a culture of collaboration in decision- in place to monitor, manage and report on risk. making among the revenue-producing units, independent control and support functions, committees and senior management Our committee system is an integral component • While we believe that the first line of defense in managing risk rests with the managers in our revenue-producing units, we dedicate extensive resources to independent of an oversight framework that establishes clear control and support functions in order to ensure a strong oversight structure and an appropriate responsibilities and lines of accountability at all segregation of duties levels of our firm. This framework provides our managers with the support vital to managing an

• A critical component of our risk management framework is our daily discipline of marking­ interconnected, global business. Our firmwide busi- Processes substantially all of the firm’s inventory to current market levels, which provides transparent and ness oversight committees report to the Management realistic insight into our financial exposures Committee. These committees convene regularly • We apply a rigorous framework of limits to control risk across multiple transactions, products, and consist of senior leaders from both our revenue- businesses and markets producing and control units. • We actively manage our positions, as proactive mitigation of our market and credit exposures minimizes the risk that we will be required to take outsized actions during periods of stress

• We focus on the rigor and effectiveness of the firm’s risk systems, and devote significant time and resources to our risk management technology

• Even the best technology serves only as a tool for helping to make informed risk decisions­ in People real time • The experience of our professionals, and their understanding of the nuances and limitations­ of each risk measure, guide the firm in assessing exposures and maintaining them within prudent levels

14 Goldman Sachs ESG Report 2010 Our Approach to Social Issues our approach to social issues

We take great care in identifying the which is critical to meeting the unique needs of our Responsible Corporate Citizenship diverse client base and the communities in which we best person for every job. We seek the Goldman Sachs recognizes its obligation to be a operate. As such, our search for prospective employ- responsible corporate citizen. Our commitment is same core qualities in every candidate: ees must be as broad as it is rigorous. reflected in three ways: integrity, a passion for excellence, The efforts of our Human Capital Management a belief in the power of the team, a • First, we recognize and take seriously our respon- Division include recruiting, training, professional sibility to help protect, preserve and promote desire to be challenged, a client service development and evaluation, compensation, and human rights around the world. Examples of orientation and the drive to make a diversity and inclusion. In all of these areas, we com- such rights are articulated in the United Nations municate with our people openly, value and reward Universal Declaration of Human Rights. Respect- difference in the world. These qualities their contributions, and support them as they bal- ing human rights also begins with nurturing a are central to our efforts to cultivate ance work, family and personal demands. Goldman workplace that fosters a culture of diversity, integ- Sachs offers a number of industry-leading benefits and sustain a diverse workforce and, rity and teamwork to achieve excellence in all of and programs to assist our people and we work hard our endeavors. beyond our offices, improve the com- to identify moments in their personal and profes- • Second, we provide equal employment opportunity munities in which we live and work. sional lives where they may benefit from the firm’s resources, relationships and services. Taking an to our employees. Our focus in personnel decisions expansive view of professional development means is on merit and contribution to the firm’s success. offering a comprehensive training and development We do not tolerate or condone any type of illegal Our Commitment to Our People curriculum and fostering ongoing dialogue between discrimination or harassment. colleagues and managers. • Third, we require our people to comply with all of Our people are our greatest asset – we say it often the firm’s policies and with all relevant laws, regu- and with good reason. It is only with the determina- In short, at every step of our employees’ careers we lations and guidelines, as well as the spirit of those tion and dedication of our people that we can serve invest in them, and ensure their interests remain rules. Full compliance is essential to maintaining our clients, generate long-term value for our share- focused on the long term and closely aligned with the trust of regulators and clients. Continually holders and contribute to the broader public. At the those of our clients and shareholders. Our goal is to strengthening that trust is a key contributor to our crux of our efforts is a focus on cultivating and sus- maximize individual potential, increase commercial ability to achieve long-term growth. taining a diverse work environment and workforce, effectiveness, reinforce the firm’s culture, expand our people’s professional opportunities, and help them contribute positively to their greater communities.

16 Goldman Sachs ESG Report 2010 our approach to social issues

To further our commitment to responsible corporate (including every member of the Management Com- citizenship, we invest in comprehensive training Notable Achievements for mittee) as faculty last year to teach leadership skills programs, including mandatory compliance training ­Goldman Sachs University in 2010 necessary in the evolving financial services landscape. that includes online modules featuring case studies. All of our people must meet their requisite training • 500,000 training hours • For our people – From the moment they become obligations, where they are provided with informa- • 98% of employees benefited from one or managing directors, Pine Street develops leaders tion and guidance on adhering to all relevant poli- more programs at key stages of their careers through transition- cies, regulations and laws. New hires also receive based programs as well as customized services • 2.2 million hits on GSU Web portal training on the firm’s Business Principles, Code of based on their specific needs. All of Pine Street’s Conduct and Business Ethics, Anti-Money Launder- • 21 hours average training per person offerings include information about the firm’s ing, Anti-Bribery and other compliance policies. approach to risk management and the leader’s role in setting the right tone at the top and contributing

To read our complete Human Rights Statement and • Variety and customization – In 2010, GSU con- to the communities in which they work. for more information on our firmwide policies, visit: ducted more than 4,100 classroom-training pro- A hallmark of Pine Street has been its selective, www.goldmansachs.com/governancepolicies. grams around the world. Most of these programs annual Managing Director Leadership Accelera- are designed for ­Goldman Sachs professionals. tion Initiative, an intensive six-month program for Training and Development • Emphasis on learning from leaders – Over 3,000 60 high-potential leaders. The Initiative provides The firm sponsors two training centers focused on sessions were taught by the firm’s managing direc- participants with feedback and coaching, exposure career development: Goldman Sachs University (GSU) tors and vice presidents. to senior leaders and Board members and, most and the Pine Street global senior leadership academy. importantly, the opportunity to engage in a strategic • Access and reach – GSU offers more than 1,600 taskforce project designed to address some of the Goldman Sachs University. GSU is open to our entire e-learning programs. Nearly 14,000 of our people firm’s most pressing issues and opportunities. population and addresses not only leadership devel- completed at least one online program in 2010. • For our clients – Pine Street offers a number of opment but also products and markets, diversity and Pine Street. Founded in 2000, Pine Street’s mission is leadership programs for clients of the firm. These inclusion, culture and orientation, and professional to enhance the leadership capabilities of our partici- sessions bring together Goldman Sachs manag- skills. Each year over 98% of our people benefit pating managing directors (partners) and clients for ers and their senior level clients to hear from firm from one or more GSU programs. the long-term success of the firm. Through its unique executives and thought leaders on enhancing lead- “leaders teaching leaders” approach, Pine Street ership skills. In addition, clients often seek advice engaged 220 of the firm’s senior leaders globally

Goldman Sachs ESG Report 2010 17 our approach to social issues

helps our people develop a stronger understanding of hires from diverse communities through a broad Other key Pine Street offerings include: global issues and challenges. During 2010, we held array of programs and encourage awareness and nine forums featuring speakers and panels on a wide accountability at all levels of the organization. We • New partner and managing director orientation programs range of issues. Topics included global vaccination, train our people about cross-cultural issues and implications for public policy from the U.S. congres- support internal networks that provide platforms to • Executive-in-Residence initiative sional and gubernatorial elections, and the impact of develop professional relationships. To ensure that

• Pine Street Women’s Leadership Forum education on the prevention of HIV/AIDS. our diversity focus permeates the entire firm, all of our employees are required to complete at least • Leadership advisory services In addition to professional development and education two hours of diversity-related training each year. • Leadership Excellence for first-year programs, Goldman Sachs offers a tuition reimburse- We also integrate this training into our orientation managing directors ment program and participates in an executive MBA programs for new hires and offer more than three fellowship program. For more information on these dozen Diversity & Inclusion training programs that • Partnership Excellence for first-year partners and other programs, visit: www.goldmansachs.com/ are frequently cited for their scope and innovation. • Partner roundtables careers. Our efforts to develop a diverse workforce have • Experienced hire acculturation We have also adopted Business Standards Com- been recognized by a number of organizations, • Executive coaching mittee recommendations to further strengthen including Working Mother and the Human Rights the firm’s training and professional development Campaign. For a complete list, and for more infor- programs, which are being implemented. For more mation on the firm’s efforts to foster a diverse work- from Pine Street on challenges involving leadership information on those recommendations, visit: force, visit: www.goldmansachs.com/diversity. development, change management, rewards and www.goldmansachs.com/businessstandards. motivation, merger integration, and culture. Often, Retention and Development Pine Street helps clients structure their own leader- With a strong focus on equality, we advance a global ship programs. Our Approach to Diversity and Inclusion effort to increase the number of diverse business For more information on training and development, leaders by supporting them in their career develop- visit: www.goldmansachs.com/careers. Recruitment and Training ment. Each year, business and region heads conduct a talent review of senior leadership as part of the Goldman Sachs fosters an inclusive culture that To broaden thinking and encourage innovation, broader effort to strengthen and deepen the firm’s values the widest range possible of backgrounds and Goldman Sachs hosts the Thought Leadership senior leadership bench, increase the visibility of perspectives. We recruit students and experienced Forum, a speaker series open to the entire firm that our senior diverse talent and ensure accountability

18 Goldman Sachs ESG Report 2010 our approach to social issues

for their development and mobility. As part of the minimum requirements that are applied at the use of diverse businesses and promoting strategic review, each business and region completes profes- business-unit level to our vendor relationships and partnerships. Where feasible, we look to partner with sional development and succession plans for its engagements. Standards for risk management our 10,000 Women and 10,000 Small Businesses operating and executive committee members, other and guidelines for diversity and environmental programs to share information on the corporate senior high-potential talent, diverse senior leader- responsibility are integral aspects of our approach procurement process in the hope that graduates may ship and senior people on expatriate assignment. to vendor management. one day become Goldman Sachs vendors.

We offer a number of high-impact development Diversity For more information on our vendor diversity initiatives and programs designed to strengthen the Goldman Sachs strives to provide diverse businesses program, visit: www.goldmansachs.com/ retention and engagement of talented women and with the opportunity to compete on a fair and equal vendordiversity. diverse professionals at the firm. These programs basis for our business and, ideally, to expand and promote commercial development, provide visible grow their businesses while working with us. Our Environment role models, encourage strategic networking and vendor diversity efforts seek and build relationships The firm asks vendors to review our Environmental aim to address the issues that can affect individuals with qualified diverse businesses by leveraging our Policy Framework (www.goldmansachs.com/ in targeted populations at various points through- industry association memberships, encouraging the environment ) and consider their objectives in out their career. providing goods or services to Goldman Sachs. Further, we ask our vendors to take the Environmen- For more information on these programs and During the completion of our new head­ tal Policy Framework into consideration in connec- our approach to diversity and inclusion, visit: quarters building at in tion with the performance of its obligations and to www.goldmansachs.com/diversity. Lower Manhattan, the firm awarded over provide us with information on their environmental $300 million in contracts to minority- and policies and practices upon request. We partner women-owned businesses, the largest amount with our vendors to enhance their use of responsibly Our Approach to Vendor Engagement ever for a single project for the Minority and and sustainably produced goods and services. In Women’s Business Enterprise program in New 2011, Goldman Sachs joined the Carbon Disclosure Our dealings with vendors and third-party service York State. ­Goldman Sachs also committed to Project’s 2011 Supply Chain Program. The Pro- providers are subject to the same disciplined over- maintaining a diverse construction workforce gram’s primary aim is to drive action on climate sight and risk management philosophy we apply to of at least 25% minorities and women, with change among companies and their vendors. our client relationships. Our Vendor Management minorities and women comprising one-third of Office defines firmwide standards, guidelines and all labor that worked on the base building.

Goldman Sachs ESG Report 2010 19 our approach to social issues

Our Commercial and Social Impact Our Approach to Philanthropy

The Goldman Sachs Urban Investment Group (UIG), formed in 2001, was the first effort led by ­For more than a century, our employees have been a major investment bank to focus exclusively on urban markets in the . UIG deploys committed to philanthropy, which has been a central the firm’s capital through investments and loans to help transform distressed communities into component of our culture. We invest our financial neighborhoods of opportunity and choice. The Group’s “double bottom line” investment strategy capital and our employees invest their time and focuses on both the financial returns and the social impacts transactions will have on underserved efforts in communities around the world. Many of communities. To date, UIG has committed over $1.35 billion to facilitate the creation and preserva- our initiatives call on our people to act as mentors tion of approximately 9,400 housing units – 75% of which are affordable to low-, moderate- and and educators. We also encourage our people to give. middle-income families – as well as 730,000 square feet of community facilities and approximately In 2010, the firm contributed more than $300 mil- 960,000 square feet of commercial and retail space. lion to nonprofit organizations around the world.

One recent example of this investing approach was UIG investing $45 million in The Bradford, Importantly, we believe our focus on philanthropy to located in Bedford Stuyvesant, Brooklyn, in June 2010. As the sole private investor in the proj- be valuable for recruitment and retention, as we find ect, UIG structured a unique and complex transaction that demonstrates its commitment to the most talented and dedicated professionals are creating public-private partnerships to help transform low- and moderate-income communities also committed to serving their communities. into ­sustainable and vibrant neighborhoods. The mixed-use, mixed-income project will include 105 rental apartments for low- and middle-income families, as well as more than 9,700 square feet The strategic philanthropic investments we make as of community-serving retail space. a firm – such as our signature 10,000 Women and 10,000 Small Businesses programs – leverage some of For more information on our Urban Investment Group, visit: www.goldmansachs.com/uig. the most powerful trends in the field of strategic phi- lanthropy – through alliances, partnerships, shared experiences and expertise, and through programs that insist on holding themselves accountable, with measurable results, organizational rigor and a com- mitment to collaboration. What’s more, globalization has ushered in the freer flow of resources, both talent and capital, as well as “impact multipliers” such as knowledge-sharing and technology. The ability to

20 Goldman Sachs ESG Report 2010 our approach to social issues

harness these for the benefit of high-impact global Sachs and others, that has shown that investments Businesses is partnering with community colleges philanthropy we believe has never been more promis- in women can have a significant impact on GDP and community development financial institutions ing or more critical. growth. 10,000 Women is active in more than 20 to deliver resources in local communities across the countries, including Afghanistan, Brazil, China, United States, including New York, Los Angeles, Our philanthropic activities are funded by the Gold- Egypt, India and Rwanda. It is expected to reach Long Beach, Houston and New Orleans. A 10,000 man Sachs Foundation, which was formed with 5,500 women by the end of 2011. According to Small Businesses program that targets both small donations from the firm, as well as by Goldman Sachs preliminary results nearly 70 percent of graduates businesses and social enterprises was launched in the Gives, a donor advised fund for firm partners that is have grown their businesses and roughly half have United Kingdom in 2010 and is currently operating funded with partner compensation and firm contribu- added jobs. in Leeds and Manchester. For more information on tions. The work of the Goldman Sachs Foundation is 10,000 Small Businesses, visit: www.goldmansachs.com/ intended to drive economic growth and job creation. In 2011, Goldman Sachs received the Committee 10000smallbusinesses. Our business is helping to allocate capital – a process to Encourage Corporate Philanthropy Chairman’s that is crucial to economic growth. We believe that Award for Excellence in Corporate Philanthropy for Goldman Sachs Gives Goldman Sachs Gives was growth creates jobs, opportunity and innovation, as 10,000 Women. Winning programs are selected by established in 2007 as a donor-advised fund to well as healthier, better educated and more prosperous a distinguished, independent, jury that determined coordinate and encourage global giving by our part- communities. We recognize that markets do not always excellence according to the following criteria: dem- ners. The program is a public charity that maintains distribute the benefits of growth equally and we believe onstrated CEO leadership, dedication to measure- individual donor accounts from which donors can we have a responsibility to contribute the talent of our ment, successful partnership, and innovation. For recommend grants to qualified charitable organiza- people, along with our capital, to promote broader eco- more information on 10,000 Women, visit: www. tions. In 2009 and 2010, partner compensation was nomic opportunity and growth. The Goldman Sachs goldmansachs.com/10000women. reduced to fund combined donations of $820 mil- Foundation funds two strategic initiatives – 10,000 lion from the firm to GS Gives. We also ask our Women and 10,000 Small Businesses. 10,000 Small Businesses In November 2009, partners to provide us with recommendations of Goldman Sachs announced 10,000 Small Businesses, not-for-profit organizations that should receive 10,000 Women In March 2008, Goldman Sachs a $500 million initiative to help 10,000 small busi- donations. During 2010, GS Gives accepted the rec- launched 10,000 Women. The program is a nesses across the United States grow and create jobs. ommendations of 365 current and retired partners, $100 million, five-year campaign to foster greater The initiative offers greater access to business educa- contributing over $200 million to 1,203 nonprofit economic growth by providing 10,000 underserved tion, mentors and networks and financial capital. It organizations around the world. These recom- women around the world with a business and man- is based on the broadly held view of leading experts mendations help to ensure that GS Gives invests in agement education. The program is grounded in that this combination of services best addresses the a diverse group of charities that improve the lives research, conducted by the World Bank, Goldman barriers to growth for small businesses. 10,000 Small of people in communities where we work and live.

Goldman Sachs ESG Report 2010 21 our approach to social issues

GS Gives focuses on underserved communities and populations, and underscores our firm’s commitment Honoring Service and Veterans to philanthropy through diversified and meaningful Goldman Sachs is committed to ensuring that veterans, including those with disabilities, have the resources giving at a time when non-profit organizations need and support they need to transition back into the civilian workforce. This is not only our civic duty, but it it most. We encourage partners to direct grants to also reinforces our commitment to cultivating and sustaining a diverse work environment. organizations consistent with one of four thematic pillars: Through philanthropy and our operations, Goldman Sachs seeks to support military veterans and their families. Our initiatives honoring service and veterans include: • Building and Stabilizing Communities

• Increasing Educational Opportunities • Prioritizing the recruitment and retention of veterans

• Creating Jobs and Economic Growth • Inclusion in our Vendor Diversity Program

• Honoring Service and Veterans • Supporting organizations and programs dedicated to the job readiness and commercial success of veterans

• The creation of the Goldman Sachs Veterans Network, a new affinity group for veterans at the firm For more information on Goldman Sachs Gives, offering personal support and professional benefits visit: www.goldmansachs.com/gsgives. • The support of veterans through GS Gives; veterans represent one of GS Gives’ four primary chari- Employee-based Initiatives table focus areas, committing to donate $20 million over a five-year period to fund a network of Community TeamWorks Community TeamWorks is nonprofits helping wounded and disabled veterans and their families return to civilian life Goldman Sachs’ global volunteer initiative that gives • Goldman Sachs volunteers engaging in service projects with veteran-related organizations our people an opportunity to take time away from work to participate on a team-based community project affiliated with a non-profit organization. Sachs offices around the world partnered with Matching Gift Program In addition to Goldman 895 nonprofit Community Partners. Over 25,300 Sachs Gives, we encourage our people to make finan- Since 1997, Community TeamWorks has offered ­Goldman Sachs people joined with family and cial contributions to their favorite charitable causes. innovative volunteering opportunities worldwide. friends to contribute over 148,800 hours to The firm matches dollar-for-dollar employee charitable By leveraging the skills and expertise of our people, their communities. gifts to eligible not-for-profit organizations up to a total we have helped to make a tangible difference in our of $20,000 per eligible employee annually. communities, while also fostering teamwork and For more information on Community TeamWorks, camaraderie within the firm. In 2010, 45 ­­Goldman go to www.goldmansachs.com/ctw.

22 Goldman Sachs ESG Report 2010 Our Approach to Environmental Issues our approach to environmental issues

A healthy global environment supports units are responsible for implementation. The Board of Directors reviews the Framework and its imple- the growth of economies and communi- To read a detailed summary of our mentation. The Environmental Markets Group com- environmental policies, practices and ties. As a firm, we depend on strong and prises experienced investment bankers and is part initiatives, download our Environ- sustainable economies and communities of the Executive Office, reporting to the Office of the Chairman, giving it both expertise and access to mental Stewardship and Sustainabil- to survive and thrive. We view environ- senior leadership. ity: Summary of 2010 Initiatives at mental and social stewardship as one of www.gs.com/environment. our responsibilities, including actively We put our environmental policies into practice and continue to deliver on our commitments across seeking solutions that enable our firm, three areas: our clients and society to minimize the $8.9 billion for clients engaged in clean technolo- • Our core business gies and renewable energy. We co-invested $388 environmental risks associated with million in expanding renewable energy and green • Our operations certain business activities. affordable housing initiatives. To support and • Our thought leadership in global markets enhance our commitment to covering clean energy In 2005, ­Goldman Sachs established our Environmen- clients and to align existing resources more strate- tal Policy Framework (Framework) in the belief that Our Environmental Stewardship and Sustainability: gically, we established the Clean Tech and Renew- a healthy environment is a prerequisite for progress, Summary of 2010 Initiatives documents our prog- ables Group in our Investment Banking Division. contributing to the well-being of society, our people ress in each of these areas during 2010 and high- • We continue to provide liquidity and risk man- lights our progress over the past five years since we and our business, and serving as the foundation for a agement for our clients as a market maker in established the Framework. To read the Summary, sustainable and strong economy. Under the Framework environmental commodities. In 2010, we placed visit: www.gs.com/environment. we have committed to deploy our people, capital and $1.2 billion in catastrophe-linked securities, which ideas to help find effective market-based solutions for offer our clients a way of mitigating financial risk environmental issues. To read the Framework, visit: from natural catastrophes, including those aris- www.gs.com/environment. Our Business Initiatives ing from weather risks such as hurricanes, winter storms, severe thunderstorms and wildfires. Our Environmental Markets Group coordinates and • In 2010, we managed initial public offerings oversees our Framework, while respective business and other financing transactions that raised

24 Goldman Sachs ESG Report 2010 our approach to environmental issues

• At the end of 2010, our GS SUSTAIN research team within the Global Investment Research divi- Our Operational Impact Our Thought Leadership sion had analyzed more than 750 large global • We continue to make progress toward reaching • In 2010, we expanded partnerships with corporate, companies in 22 industries and developed a focus our goal of reducing carbon emissions to zero by academic and non-governmental organization list of 68 companies with the potential for sustain- 2020.1 Due to enhanced operational efficiency, (NGO) leaders in areas including energy efficiency, able corporate outperformance. Since its incep- gross Greenhouse Gas (GHG) emissions were water and clean energy policy. We also have part- tion in June 2007 through 2010 year-end, the GS reduced by 3% in 2010, equivalent to 9,752 met- nerships focused on environmental opportunities SUSTAIN Focus List has outperformed the MSCI ric tons of CO2e. pertaining to China and forest carbon. All Country World Index by 38.5% on an equally- weighted basis. • We increased focus on accounting and disclosure • During 2010, we hosted, sponsored and partici- of our GHG data by (1) commissioning a third- pated in several major conferences, attended by • Goldman Sachs Asset Management has established party assessment of our key operational processes policy makers, NGOs and educators, as well as a team of people with representatives across all and controls; (2) obtaining limited assurance of Goldman Sachs clients, investors and employees. asset classes to further its focus on environmental, Scope 1 and Scope 2 GHG data and corresponding These events focused on topics such as the role of social and governance research and sustainability intensity measures; (3) closing the one-year report- markets in addressing environmental challenges, analysis implementation. ing lag; and (4) reporting our Scope 3 emissions how to further capital to scale up low-carbon • We take into consideration environmental, social from business travel.2 solutions, the role of public-private partnerships, and governance factors in our business selection the importance of growth markets and the envi- • Our LEED-certified real estate now totals decisions. This practice is in-line with our com- ronment, and forest carbon. 3.8 million square feet, making us one of the mitment to environmental and social steward- world’s largest owners of green buildings under ship, prudent risk management and serving the the new construction and commercial interiors best interests of our clients. In 2010, 327 transac- rating systems. tions were reviewed by the Environmental Mar-

kets Group. 1 The terms “carbon emissions” and “Greenhouse Gas (GHG ) emissions” are used interchangeably throughout this report. • In September 2010, we established the Physi- 2 As defined by the Greenhouse Gas Protocol, Scope 1 emissions are the direct GHG emissions from cal Commodity Review Committee, a firmwide sources that are owned or controlled by Goldman Sachs; Scope 2 emissions are the indirect GHG emissions from consumption of purchased electricity, heat or steam; and Scope 3 emissions are governance committee, to ensure that we have a other indirect emissions that are a consequence of Goldman Sachs activities but occur at sources consistent approach to evaluating and managing owned or controlled by another entity. environmental, human health and safety risks in our physical commodities activities.

Goldman Sachs ESG Report 2010 25 Highlights of Environmental Progress Since 2005

We invested more than We helped raise more than We invested more than $3 billion $49 million in virtual desktop $19 billion in financing in clean energy and environmentally infrastructure (VDI) to improve the for clean technology and beneficial projects energy efficiency of our workplace renewable-energy clients computing platform We developed and placed approximately $10 billion in catastrophe-linked securities for our clients to help mitigate We invested the We invested more than $3 billion financial risk from natural catastrophes, toward LEED-certified office space. including those arising from weather risks intellectual capital LEED-certified real estate now totals of our people and more 3.8 million square feet, than $7 million through the making us one of the world’s largest We achieved a 42% reduction Center for Environmental Markets in owners of green buildings under the in average power consumption partnerships with corporations, NGOs, new construction and commercial per server host in our North American and academic institutions to further interiors rating systems data centers while increasing market-based solutions to computing capacity by environmental issues more than 60% during that period

26 Goldman Sachs ESG Report 2010 2010 Awards and Recognitions

Barron’s Human Rights Campaign TargetJobs Listed as one of The World’s Most Respected Companies Best Places to Work in Banking and Financial Services Most Popular Recruiter among Investment Banking and (2004–2010) Investment Firms BusinessWeek Corporate Equality Index Rating of 100% (2004–2010) Bloomberg/Twenty Best Companies for Leadership Universum Japan Women’s Innovative Network Top 100 Ideal Employer 2010 The Chronicle of Philanthropy Silver Award for Diversity Ranked #9 Ranked as second-largest corporate giver in 2010 survey Maplecroft Vault Fortune Ranked #20 on the Climate Innovation Index 2011 Top 25 Banking Employers in Europe The World’s Most Admired Companies Ranked #1 Ranked #8 New York State Minority and Women’s Business Vault Banking 50 100 Best Companies to Work For (listed every year since Enterprise Program Top 50 Most Prestigious Banking Employers in its inception) Recognized for having the highest minority- and women- North America Ranked #24 owned business participation for a single project in the Ranked #1 for 11 consecutive years design and construction of 200 West Street Financial Times-JustMeans.com 2011 Overall Diversity Ranking 2010 Social Innovation Awards Stonewall Workplace Equality Index Ranked #1 Most Innovative Recognition for 10,000 Women Top Places to Work for the Lesbian, Gay, Bisexual and 2010 Top Asia Pacific Banking Employers Transgender (LGBT) community Ranked #1 FTSE4 Good Ranked #5 overall, #1 in Financial Services, #3 in the Member company of the FTSE4 Good Index Private Sector Working Mother Named one of the 100 Best Companies for Working Glassdoor.com The Sunday Times Mothers (six consecutive years) Financial Services Industry Report Card 25 Best Big Companies to Work For One of the Best Companies for Multicultural Women Top-Rated Investment Bank Ranked #2 Second Highest Overall Financial Services Provider (three consecutive years) Graduate Recruitment Awards 2010 Named Employer of Choice in Investment Banking (11 consecutive years) Ranked #15 in the Top 100 Graduate Employers List Top 50 Places Where Women Want to Work

Goldman Sachs ESG Report 2010 27 Contact

Corporate headquarters 200 West Street New York, NY 10282 Telephone: 212.902.1000 www.goldmansachs.com

Inquiries should be addressed to: Investor Relations Goldman, Sachs & Co. 200 West Street New York, NY 10282 Telephone: 212.902.0300 email: [email protected]

28 Goldman Sachs ESG Report 2010 Goldman Sachs ESG Report 2010 29 www.gs.com