Goldman Sachs Is Being Investigated Over E.S.G. Funds
The Securities and Exchange Commission is investigating Goldman Sachs over its E.S.G. investment funds — funds that invest in companies that say they are committed to environmental, social and governance principles, according to two people familiar with the matter.
The agency is examining E.S.G. mutual funds overseen by the bank’s asset management unit, said the two people, who spoke on the condition of anonymity because they were not authorized to comment publicly on the matter. The Wall Street Journal reported earlier on the investigation.
The S.E.C. declined to comment.
Regulators have intensified their scrutiny of sustainable investment vehicles, which have become increasingly popular, but have also been criticized for their lack of accountability, with lawmakers and investors calling for them to be reined in.
E.S.G. reporting has emerged as a top priority for the S.E.C. under the agency’s chair, Gary Gensler. Earlier this year, the commission proposed changes that would require more disclosure from companies to investors about the risk that climate change and new government policies on it might pose to their operations. And last year, the regulator set up a special E.S.G. task force to focus on whether Wall Street firms and companies were misleading investors about their investment and business criteria in the environmental, social and governance area.
The investigation into Goldman’s mutual funds appears to be related to the new enforcement initiative. Last month, the investment advisory arm of Bank of New York Mellon paid about $1 million to settle an investigation by the S.E.C. into allegations it had omitted or misled investors about its E.S.G. criteria for assessing investments. The S.E.C. is also looking into Deutsche Bank.
Overseas, the authorities are also stepping up their investigation into how firms market E.S.G. criteria. Asoka Woehrmann, the head of Deutsche Bank’s asset management business, resigned this month after the company’s Frankfurt office was raided over allegations that it overstated claims on E.S.G. In May, HSBC suspended Stuart Kirk, who led responsible investing at its asset management unit after he said policymakers had exaggerated risks from climate change.