Progress is everyone’s business 2010 Environmental, Social and Governance Report Goldman Sachs 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