ABSTRACT
There is growing pressure on brokers such as Goldman Sachs to demonstrate how it factors environmental, social and governance (esg) factors into equity valuations. This chapter describes Goldman Sachs's attempt to systematically integrate esg factors into its analysis of the oil and gas sector—the Goldman Sachs Energy esg Index. It focuses on how the issues may affect a key long-term value driver for the sector: namely, the ability to access and operate new oil and gas resources. The key to changing underlying returns in the oil and gas industry in the future is the success of reserve development programmes; Goldman Sachs believes that the next generation of legacy assets, or new resources, will be the key differentiating factor. The Energy esg Index is a composite index that comprises a number of different dimensions of corporate performance on esg issues.
