Why the SEC Fines Goldman Sachs on ESGs
The SEC (the US equivalent of Consob) has fined the bank Goldman Sachs 4 million dollars for failing to comply with ESG policies. The authority is placing great emphasis on checking the veracity of "sustainable" investments. Here are the details and background
The Securities and Exchange Commission (SEC), the US federal body that oversees the stock exchange, has fined a division of US investment bank Goldman Sachs $4 million for failing to comply with its ESG policies: the acronym stands for Environmental, Social and Governance and indicates those factors that "measure" the environmental, social and management sustainability of an investment.
In a statement , the SEC explained that the allegations relate to "deficiencies in policies and procedures relating to two mutual funds and a separately managed account marketed as environmental, social and governance (ESG) investments" by the management firm. investments Goldman Sachs Asset Management, which agreed to pay the fine without commenting on the arguments of the authority.
GOLDMAN SACHS' ANSWER
The firm said it was "pleased to have resolved this matter, which involved historic policies and procedures relating to three Goldman Sachs Asset Management Fundamental Equity group investment portfolios."
WHAT THE SEC DISCOVERED
The SEC has highlighted how, from April 2017 to February 2020, Goldman Sachs Asset Management committed several failures in its policies and procedures for selecting investments according to ESG factors.
“From April 2017 to June 2018,” wrote the authority for example, “the company did not have written policies and procedures for ESG research in a product, and once the policies and procedures were established, did not follow them consistently before February 2020.”
THE POPULARITY OF ESGs
The principles of sustainability in investing have become extremely popular, given the increased sensitivity of public opinion – and investors, by extension – towards climate and environmental issues. However, ESG is not yet well regulated, either in the US or in Europe.
However, the American regulatory authorities are intensifying controls on the so-called "sustainable investment vehicles", which are often opaque: it is not said, that is, that the ESG parameters are then really respected by the companies in which one invests, nor is it easy to establish of common metrics.
THE REGULATORY PUSH OF THE SEC
ESG regulation is a top priority for current SEC Chairman Gary Gensler. Under him, the commission proposed regulatory changes that would force companies to provide investors with more information about the risks to their businesses caused by climate change and government policies to curb emissions.
The SEC has also set up a task force dedicated to ESG, with the task of verifying whether companies and investment firms are misleading clients with false assessments of the "sustainability credentials" of an asset or fund.
– Read also: A letter to the SEC reveals BlackRock's altarpieces on China and ESG investments
THE BNY MELLON AND DEUTSCHE BANK CASES
The investment advisory arm of Bank of New York Mellon paid $1 million last May to close an SEC investigation into allegations the financial services firm misled its clients about the ESG credentials of some investments.
The SEC has also investigated the German bank Deutsche Bank , accused of misleading communication on investment sustainability criteria. In late May, inspectors from BaFin, the German financial regulator, raided the offices of Deutsche Bank and its subsidiary DWS (an asset management company), accused of misleading their clients about the sustainability of certain investment products.
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/perche-la-sec-multa-goldman-sachs-sugli-esg/ on Fri, 25 Nov 2022 08:36:40 +0000.