Goldman Sachs to Pay $4M SEC Penalty in ESG Fund Case

What You Need to Know

Regulators says the firm “had several policies and procedures failures” involving ESG research used to pick and track stock holdings.

Goldman Sachs Group Inc. will pay $4 million to settle U.S. regulators’ claims that its asset-management unit didn’t properly weigh environmental, social and governance factors in some of its investment products.

The Securities and Exchange Commission said that the Goldman Sachs Asset Management unit “had several policies and procedures failures involving the ESG research its investment teams used to select and monitor securities.”

The alleged misconduct occurred from April 2017 to February 2020, the SEC said in a statement on Tuesday.

The unit didn’t have any written policies or procedures for ESG research in one of the products from April 2017 to June 2018, and once they were put in place failed to consistently follow them prior to February 2020, the markets watchdog said.

The SEC said the bank’s unit didn’t properly complete ESG questionnaires on companies it planned to include in an investment portfolio prior to their selection.

The issues related to Goldman Sachs ESG Emerging Markets Equity Fund, Goldman Sachs International Equity ESG Fund and a U.S. Equity ESG separately-managed account strategy, Goldman Sachs said in a statement.

“These historical matters did not materially impact the investments’ satisfaction of the ESG criteria contained in those policies and procedures,” it said. The bank didn’t admit or deny the regulator’s findings.