Goldman Sachs to pay $4m penalty over ESG fund claims

5 Dec

The U.S. Securities and Exchange Commission charged Goldman Sachs Asset Management this month with failing to follow its policies and procedures involving its ESG investments, and fined the company $4 million.

The SEC found that, from April 2017 until February 2020, the company had several policy and procedure failures involving the ESG research its investment teams used to select and monitor securities. Goldman Sachs Asset Management has agreed to pay the $4 million penalty.

The charges were specifically over "policies and procedures failures involving two mutual funds and one separately managed account strategy marketed as Environmental, Social, and Governance (ESG) investments," the regulatory agency said in a statement on Nov. 22, 2022.

The fine for Goldman is more than double the $1.5mn BNY Mellon agreed to pay earlier this year for allegedly misstating and omitting information about ESG considerations for its mutual funds. That case marked the first time the SEC settled with an investment adviser concerning ESG statements.

Despite investor concerns over a global recession sustainable funds still held up better than the broader market, according to data from Morningstar to August. Against the backdrop of continued demand for sustainable investing, regulators are pushing to ensure the sector achieves its environmental ambitions.

In the UK, the Financial Conduct Authority (FCA) is proposing a package of new measures including investment product sustainability labels and restrictions on how terms like ‘ESG’, ‘green’ or ‘sustainable’ can be used.

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