THE GOLDMAN SACHS GROUP, INC. | Chinese congruency of certain ETFs at THE GOLDMAN SACHS GROUP, INC.

Status
2.48% votes in favour
AGM date
Previous AGM date
Proposal number
7
Resolution details
Company ticker
GS
Lead filer
National Center for Public Policy
Resolution ask
Conduct due diligence, audit or risk/impact assessment
ESG theme
  • Social
ESG sub-theme
  • Human rights
Type of vote
Shareholder proposal
Filer type
Shareholder
Company sector
Financials
Company HQ country
United States
Resolved clause
Resolved: Shareholders request that the Board of Directors commission and publish a third-party review within the next year (at reasonable cost, omitting proprietary information) of whether the Company’s China-focused ETFs align with its commitments, including its Statement on Human Rights and its Statement on Modern Slavery and Human Trafficking. The Board of Directors should report on how it addresses the risks presented by any misaligned funds and the Company’s plans, if any, to mitigate these risks, such as detailing its plans to shift these investments to less problematic companies or regimes.
Supporting statement
Supporting Statement: The Company’s 2021 Sustainability Report touts its socially responsible goals and achievements.1 In doing so, it advertises Company’s policies and practices that it says prioritize its commitment to human rights and preventing modern slavery and human trafficking.2

But nothing about supporting business in China, which is controlled by the dictatorial and inhumane Chinese Communist Party (CCP), does anything to further these ideals.

The Chinese government has an abhorrent human rights record, as witnessed by its abuses against the Uyghurs and other ethnic minorities in Xinjiang, including forced labor programs, forced sterilizations, and torture.3 Chinese authorities perpetrate genocide and use emerging technologies to carry out discriminatory surveillance and ethno-racial profiling measures designed to subjugate and exploit minority populations.4

This poor human rights record makes China’s increasingly aggressive stance toward Taiwan even more alarming, as it makes claims of sovereignty over the island. It has recently sent warplanes towards the territory’s air defense zone, and has called for Taiwan’s “reunification” with China, stoking fears and geopolitical instability.5

The Company nonetheless conducts a significant amount of business in China, investing in companies through the Goldman Sachs ActiveBeta Emerging Markets Equity ETF (GEM). GEM, which has hundreds of millions of assets under management, effectively funds the CCP’s oppressive military companies. These include companies such as the China National Nuclear Corporation (CNNC),6 which oversees the CCP’s nuclear weapons program, and Dongfeng Motor Group,7 which builds tactical vehicles for the People’s Liberation Army. The CNNC was even designated by the Pentagon at one point as a Communist Chinese military company, in accordance with its obligations under the National Defense Authorization Act to highlight the CCP’s military-civil fusion strategy.8

Goldman Sachs invests in these CCP driven companies despite the Chinese regime committing genocide against ethnic minorities and threatening military action against the government of Taiwan – actions that run counter to everything that the Company’s sustainability and other reports says the company stands for. As such, it is critical that the Board commission and publish a third-party review that includes experts who are fully aware of the dangers that China poses to ensure that Goldman Sachs’ actions as a company live up to its words.

How other organisations have declared their voting intentions

Organisation name Declared voting intentions Rationale
Anima Sgr Against As the company appears to provide shareholders with sufficient disclosure regarding its oversight and risk management processes for its investment decisions. As the board clarifies, it does not appear that Goldman Sachs’ ActiveBeta Emerging Markets Equity ETF or other company products hold securities of the China National Nuclear Corporation, a U.S.-sanctioned entity. While the ETF does invest in a number of Chinese companies, Goldman Sachs appears to have a nuanced process of incorporating ESG factors and using a risk management framework for its investment decisions. Absent major controversies as a result of these investment decisions, it appears that the company has adequate oversight and risk management frameworks to address related risks, and a third-party review is not currently necessary.
Rothschild & co Asset Management Against

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