Are buildings actually going green? 🌳 After all, it is almost Earth Day.

[Goldman Sachs]( [BRIEFINGS] April 21, 2022 Changes at the Top: Spinoffs, Separations and Restructurings Against a challenging macroeconomic backdrop, a growing number of companies are breaking up with themselves in an effort to create value for shareholders. In the [latest episode of Exchanges at Goldman Sachs]( Ben Snider, senior strategist on the U.S. Portfolio Strategy team in Goldman Sachs Research, and David Dubner, global head of M&A structuring in the Investment Banking Division, delve into trends in restructuring (think spinoffs, separations and carve-outs), their longevity and where these transactions are effective in generating value. Profit margins are in focus. “Companies are dealing with incrementally higher input costs. And the key question for investors is going to be whether companies will be able to sustain these record profit margins as growth slows but those input costs continue to rise,” Snider explains to Exchanges host Allison Nathan of Goldman Sachs Research. In addition to pulling the usual levers such as cutting costs, improving efficiencies and raising prices, “we're seeing an increased focus on potential M&A and, in particular, increased focus on splits and spinout,” he says. “In our view, that trend is just going to continue as companies have to find new, creative ways to sustain their growth and sustain their profitability.” The restructuring trend is widespread with room to run. “We are seeing this across all sectors, all geographies, and all size companies. So there is not a one-size-fits-all approach,” says David Dubner, global head of M&A structuring in the Investment Banking Division. “Ultimately it comes down to: Can I re-rate a parent company and a spinoff company in excess of where I trade today, thereby creating shareholder value? And as we have both discussed, the management focus that can come through a separation and renewed or different capital allocation priorities will continue to fuel this type of activity in our view.” Subscribe wherever you get your podcasts. [Spotify]( | [Apple]( | [Google]( | [Stitcher]( [Listen to podcast]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Exchanges%20at%20Goldman%20Sachs&body=https%3A%2F%2Fwww.youtube.com%2Fplaylist%3Flist%3DPLIyiGQywEp66lKvfhiDbiuZnCboYneuX2) Will the US Go into Recession? Can the Federal Reserve slow the U.S. economy enough to bring down inflation without causing a recession? It’s a delicate balance, but there are several reasons that it could be more achievable than in the past, according to economists at Goldman Sachs. Goldman Sachs Research’s jobs-workers gap is a key metric for this analysis: the difference between the total number of jobs (in other words, employment plus job openings) and the total number of workers, at more than 5.3 million, shows that the labor force is at its most overheated level in postwar history. Goldman Sachs economists consider this measure a better indicator of labor market tightness than traditional measures because it includes open positions in addition to current employment when gauging labor demand, and because it uses raw data and doesn’t require an estimate of the natural level of unemployment. This measure has shown more statistical significance with wage growth and more accurate recent predictions than standard measures like the unemployment gap or the prime-age employment to population ratio. While it’s hard to say with precision, the jobs-workers gap needs to shrink by about 2.5 million (roughly 1% of the adult population in the U.S.) in order to cut wage growth from its pace of around 5% to 6% to about 4% to 4.5%, according to estimates by Goldman Sachs Research. That would be consistent with the Fed’s inflation forecast of around 2% to 2.5% for the next two years. For the Fed, that means damping the outlook for growth just enough to get companies to put some of their expansion plans on hold and close some open positions — but not so much that they slash output and lay off workers. To achieve that goal, growth in gross domestic product would need to slow to about 1% to 1.5% for a year, which is weaker than the (below consensus) 1.9% that Goldman Sachs economists have forecast (fourth quarter, year-over-year). [Read more about how Goldman Sachs Research expects the U.S. to avoid a contraction here.]( [Read more]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Will%20the%20US%20go%20into%20recession%3F&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fpages%2Fwill-the-us-go-into-recession.html) Building for the Future: Are Developers Going ‘Green?’ Environmental, social and governance (ESG) considerations are increasingly driving corporate strategy in asset classes around the world. But when it comes to building real estate, is environmental impact – particularly carbon emissions – a critical concern for developers and investors? We sat down with Nora Creedon, an investor in private real estate within Goldman Sachs Asset Management, to discuss if buildings truly are going “green.” Nora, when we think of climate change, real estate might not be the first thing that comes to mind. But how important is it in addressing this global crisis? Nora Creedon: Statistics tell us that real estate is actually one of the best opportunities to address climate change even though so much of the focus has been on industries like transportation. Property and construction represent about 40% of both global energy use and emissions, so, shifting toward more sustainable building and operating practices can have a tremendous impact on climate change outcomes. What are the key issues driving the demand and urgency for “green” buildings? Nora Creedon: It’s really three things: The first is the global groundswell of support for more sustainability. Regulators and officials in cities around the world have also taken note of the impact property can have, and we’re observing more demands on property owners. For example, you’re seeing London, Paris, Stockholm, New York, Los Angeles, Tokyo and many other cities committing to carbon reduction as quickly as possible. With those commitments come new regulations for buildings to meet various efficiency and sustainability measures. The number of buildings that will be facing these new regulations and will potentially be unable to meet them is staggering. Secondly, tenants increasingly want their spaces to represent their values and they’re willing to pay the premium for “green buildings.” Many corporate users of office space have committed to carbon neutrality goals; they need their real estate to be consistent with that. We also think the shifting dynamics post-COVID have led many tenants to proactively seek out more sustainable features in their space. And finally, capital is increasingly being reallocated to sustainable strategies. As pension funds and other institutional clients make carbon commitments with their portfolios, that is going to drive more dedicated strategies toward sustainability. That has already happened in the public markets, but we think it’s also likely to play out in the private markets in the coming years. And investors can make a case for premium valuations for sustainable assets, so you can expect more capital will therefore chase that dynamic, which creates a flywheel effect. [Learn more about the future of investing in green real estate here.]( [Read more]( [Read more Briefly Q&As]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Building%20for%20the%20future%3A%20Are%20developers%20going%20%E2%80%98green%3F%E2%80%99&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2F%3Fmkwid%3Ds8wI6wHST_dc_pcrid_269960518004_pkw_goldman%2520sachs%2520what%2520is_pmt_p_pdv_c_slid__pgrid_5625034195_ptaid_aud-397045844041%3Akwd-47442304315_%26gclid%3DEAIaIQobChMI6L3Giuai9wIVQu3tCh1mUwuvEAAYASABEgLuD_D_BwE) Under Secretary Keeps the US Air Force Up to Speed Above (L to R): Vanya Kasanof of Goldman Sachs and Under Secretary of the Air Force Gina Ortiz Jones In an [episode of Talks at GS]( Gina Ortiz Jones, Under Secretary of the Air Force, discusses the war in Ukraine, next-generation capabilities and efforts to bring greater diversity to the Air Force. On the war in Ukraine: “What always comes to mind is the will of the Ukrainian people and the willingness to fight. Having served as an intelligence officer, you always look at two things…intent and capability. The Ukrainian people have shown us how important intent and capability are in measuring what they can do.” On modernizing and equipping the Air Force with next-generation capabilities: “It’s just going to be a different set of capabilities that we need against the pacing challenge in an environment that we have not operated, in a way that we may need to in the future…What we had previously over the last 30 years is going to be insufficient against the pacing challenge.” On breaking barriers as the first openly gay woman of color to serve as Under Secretary in any U.S. military branch: “It’s great to be the first. But it’s more important that you’re not the last. And so, having had my own experience and then having seen the ability given this perch to, really, with a pen, change some of these policies, change the realities and change how people see their opportunities with a career in the Department of the Air Force, it’s really humbling.” [Watch video]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=Gina%20Ortiz%20Jones%20on%20the%20evolution%20of%20the%20US%20Air%20Force&body=https%3A%2F%2Fwww.youtube.com%2Fwatch%3Fv%3Da0CGqUNYuA0) BRIEFINGS Brainteaser: The First Shoots of Earth Day Tomorrow, is Earth Day: the annual event that mobilizes 1 billion people to show support for environmental protection around the world. For this week's BRIEFINGS brainteaser, can you tell us when the first Earth Day took place? A) 1970 B) 1982 C) 1998 D) 2005 [Check your answer here.]( [Take quiz]( SHARE: [twitter]( [facebook]( [LinkedIn]( [email](mailto:?subject=BRIEFINGS%20Brainteaser%3A%20The%20Founding%20of%20Earth%20Day&body=https%3A%2F%2Fwww.goldmansachs.com%2Finsights%2Fseries%2Fbriefly%2F%3Fmkwid%3Ds8wI6wHST_dc_pcrid_269960518004_pkw_goldman%2520sachs%2520what%2520is_pmt_p_pdv_c_slid__pgrid_5625034195_ptaid_aud-397045844041%3Akwd-47442304315_%26gclid%3DEAIaIQobChMI6L3Giuai9wIVQu3tCh1mUwuvEAAYASABEgLuD_D_BwE) Goldman Sachs Media Highlights CNBC - April 20 [Euro Zone Economy is Slowing 'Pretty Rapidly,' as the War in Ukraine Continues, Economist says]( (2:43) Bloomberg - April 19 [Goldman Expects China's Economy to Grow 4.5% This Year]( (5:24) CNBC - April 18 [Credit has Probably Outperformed the Equity Market on a Risk-Adjusted Basis, says Goldman’s Karoui]( (04:26) [Subscribe]( [Unsubscribe]( Some of the images used in this newsletter are sourced via Getty Images. The data provided in this newsletter is for information purposes only and should not be construed as investment or tax advice nor as a recommendation to buy, sell, or hold any particular security. Goldman Sachs believes the data in this newsletter is accurate, but does not verify its accuracy independently and does not warrant or guarantee that it is accurate or complete. Goldman Sachs has no obligation to provide any updates or changes to the data. No investment decisions should be made using this data. To the extent this newsletter includes material from the Goldman Sachs Securities Division, please click [here]( for information relating to Securities Division material and your reliance on it. 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