Yahoo Finance Goldman Sachs fined $4m after misleading customers about ethical investments
Goldman Sachs has been fined $4m by US regulators for misleading customers about investments advertised as having an environmentally friendly focus.
The Securities and Exchange Commission (SEC) said the charges involved Goldman’s asset management unit, which had several policies and procedures failures involving the Environmental, Social and Governance (ESG) research its investment teams used to select and monitor securities.
The Wall Street giant did not admit or deny guilt in paying the fine, the SEC noted.
The settlement comes amid a clampdown on companies that wrongly market their investment products as environmentally friendly.
Global investors have poured cash into ESG-focused funds in recent years as they have paid more attention to issues such as climate change or workforce diversity.
ESG investing has come under fire in recent months with critics arguing that some companies and investors are using the catch-all term to “greenwash” – giving false information to promote an environmentally responsible image.
Earlier this year, Deutsche Bank's headquarters was raided by German police over accusations of “greenwashing” its investments.
At the time, the bank said it “continuously cooperated fully with all relevant regulators and authorities on this matter and will continue to do so”. The investigation is ongoing.
Andrew Dean, co-head of the SEC’s asset management enforcement division, said: “Today’s action reinforces that investment advisers must develop and adhere to their policies and procedures over their investment processes, including ESG research.”
The alleged misconduct occurred between April 2017 and February 2020.
The SEC said: “From April 2017 until June 2018, the company failed to have any written policies and procedures for ESG research in one product, and once policies and procedures were established, it failed to follow them consistently prior to February 2020.”
Sanjay Wadhwa, deputy director of the SEC’s enforcement unit and head of its climate and ESG task force, said: “In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ESG.
“They must establish reasonable policies and procedures governing how the ESG factors will be evaluated as part of the investment process.”
A spokesman for Goldman said the bank was “pleased to have resolved this matter, which addressed historical policies and procedures related to three of the Goldman Sachs Asset Management fundamental equity group’s investment portfolios”.
