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Macaskill on markets: Commodity boom could clash with ESG push

Unprecedented oil volatility and gold at a record high may tempt banks back into commodity trading, but conflicts of interest with ESG goals could quickly emerge.


Goldman Sachs was keen to highlight the contribution made by commodities to its robust recent second-quarter results.

“Strong trading performance was aided by high volumes and volatility across all of our businesses, including oil, natural gas and metals,” chief financial officer Stephen Scherr said on the bank’s earnings call with analysts.

Goldman – in line with other banks – did not disclose how much of its $4.2 billion of quarterly fixed income revenue came from commodities, and Scherr stressed that all five of its debt sales and trading business groups performed well.

Stephen Scherr,
Godlman Sachs

It is nevertheless worth noting that the two US banks with the greatest historical bias towards commodity trading – Goldman and Morgan Stanley – were also the two firms that saw the biggest percentage increases in fixed income revenue in the second quarter. Goldman saw its fixed income revenue rise by 149% compared with the second quarter of 2019, while Morgan Stanley managed to increase its revenue by 168%, though to a lower overall total than Goldman of $3 billion.

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