A big money manager says investing with a conscience is now in the mainstream of money management.

Goldman Sachs Asset Management officials say ESG (environmental, social and governance) investing, along with impact investing, are no longer specialty niches, but are taking a prominent place on the investment menu.

“There has been a dramatic increase and interest over the past four years in all sorts of our clients in ESG and impact investing,” says Hugh J. Lawson, global head of ESG and impact investing for Goldman Sachs.

He and other company officials spoke during a news conference at Goldman's Manhattan headquarters.

“ESG investing,” Goldman Sachs says in an internal paper, “is no longer a carve-out within a portfolio—it is the portfolio for some investors. What was once the province of a small number of family offices and foundations has drawn sharply increased participation among pension funds, insurance companies, non-profits and faith-based investors.” 

Goldman Sachs officials noted that they made a strategic commitment to the sector when they launched their ESG initiative in 2014. Two years later, they acquired Imprint Capital, a large ESG advisor. Today, they add, they devote much more in resources to ESG investing because of its increasing popularity and growing asset base.

As of the middle of this year, Goldman Sachs held some $10.6 billion in ESG assets under management. That's up from $500 million when they closed the Imprint deal, Lawson noted.

Goldman Sachs officials say they have a team of 22 professionals dedicated to ESG and impact investing across the investment spectrum. The group is working with public and private sector clients, Goldman Sachs officials said. Clients include the New York State Common Retirement Fund, with a $2 billion risk-aware, low-carbon equity strategy, and a $1.1 billion custom, low-carbon, ESG and fixed-income strategy for a San Francisco-based private client.

John Goldstein, the co-founder of Imprint and now a managing director at Goldman Sachs, adds that over the last few years institutional clients have been asking that a larger share of their portfolios be put into ESG assets. “Instead of saying why can’t we do this with a small portion of our assets, they asked why can’t we do this with our whole portfolio?” Goldstein says.

ESG, he added, is different, and more comprehensive than socially conscious investing.

“In the early years, socially conscious investing was an amalgamation of a few different practices. Often it was negative screening of things people didn’t want to own paired with some form of active management that was not particularly connected to that,” Goldstein says. “What has unfolded with ESG here is a much greater clarity of conception and sharpness of execution around distinct disciplines.”

The New York State pension fund's commitment to ESG, for example, is an “index-like approach—getting an efficient exposure in a risk-managed way,” but with a commitment to reducing carbon footprints, he says.

Goldstein describes the approach as “getting the beta you want” along with the values you want.

Asked how one can judge this style, Goldstein says he will compare ESG performance “to the same peers and the same market benchmarks as any other things.”