“In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ‘ESG,’” said Sanjay Wadhwa, Deputy Director of the SEC’s Division of Enforcement and head of its Climate and ESG Task Force said.
“When they do, they must establish reasonable policies and procedures governing how the ESG factors will be evaluated as part of the investment process, and then follow those policies and procedures, to avoid providing investors with information about these products that differs from their practices,” Wadhwa added.
Earlier this year, the SEC fined a BNY Mellon subsidiary $1.5 million for failing to meet its ESG representations regarding certain of its mutual funds.
This past spring, the SEC proposed a rule that would require RIAs, investment companies, and business development companies to submit enhanced disclosures about investments that claim ESG strategies dictate their investment choices. The proposal has met with significant pushback from the industry.
This article was provided by Bloomberg News.