By: Ken Chase.
The U.S. Securities and Exchange Commission recently confirmed that it had settled charges against Goldman Sachs Asset Management. GSAM had been charged by the regulator for issues related to its failure to follow the company’s own environmental, social, and governance (ESG) policies and procedures. GSAM agreed to pay a penalty of $4 million, while also consenting to a censure and a cease-and desist order.
In a press release announcing the action, the SEC asserted that GSAM had failed in several areas of ESG-related policy. According to the release:
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.
Company personnel were reportedly required to research each target company before it could be added to that product’s portfolio of investment opportunities and fill out a questionnaire. However, those employees apparently ignored that process in numerous instances by completing the form after companies had already been added to the portfolio. Moreover, the often relied on old research that did not meet the current policy’s standards.
SEC Division of Enforcement Deputy Director and Climate and ESG Task Force head Sanjay Wadhwa emphasized that companies that choose to focus on ESG offerings must follow their own rules to ensure that investors are properly protected:
“Today’s action reinforces that investment advisers must develop and adhere to their policies and procedures over their investment processes, including ESG research, to ensure investors receive the advisory services they would expect to receive from an ESG investment.”
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