24 Sustainability Report 2021 Climate Transition | Driving Transition Spotlight on Carbon Markets: Our Commercial Framework and Approach As an important tool to reduce carbon emissions, carbon markets can drive reductions at the most efficient price. By offering solutions within carbon markets as part of our cross- firm Decarbonization offering, Goldman Sachs can help to better position industries and clients for continued progress in their climate transition journey. For more than 10 years, Goldman Sachs has been active in major compliance carbon markets, such as the European Union Emissions Trading System (EU ETS) and the California Cap and Trade Program. We are also active in the growing global voluntary carbon offset market — and within several industry and advisory bodies. For example, we are members of the “Taskforce on Scaling Voluntary Carbon Markets,” a private sector-led initiative working to scale an effective and efficient voluntary carbon market to help meet the Paris Agreement goals. Within the compliance and voluntary CLIMATE TRANSITION carbon markets, we offer a variety of trading, financing, and risk management solutions to help corporates and investors manage their carbon exposure and meet their sustainability goals. Setting the Scene: Carbon Pricing Initiatives on the Rise Carbon pricing initiatives, of which there are more than 60 globally, are an important tool to achieve the emission reduction ambitions under the Paris Agreement. We believe that a global carbon price can serve as a critical path to advancing global net zero ambitions by incentivizing technological innovation and progress in decarbonization technologies. While carbon pricing and taxes can be an effective policy instrument, market-based mechanisms allow the supply and demand for carbon allowances — or credits — to determine the price of carbon. These voluntary markets can effectively aim to drive finance to activities that reduce emissions.