ESG | June 14, 2022

“Greenwashers” on notice as global crackdown on ESG mislabeling continues

Dennis Price
ImpactAlpha Editor

Dennis Price

ImpactAlpha, Jun. 14 – Another day, another bank under investigation over misleading ESG claims.

Goldman Sachs is the latest financial institution to come under investigation by the Securities and Exchange Commission for whether investments made from environmental, social and governance, or ESG, funds managed by the firm’s asset management arm are in violation of metrics promised in marketing materials, reports The Wall Street Journal.

Last month, the SEC charged and fined BNY Mellon Investment Adviser for similar misstatements and omissions regarding the marketing of ESG funds. And German authorities raided the offices of asset manager DWS in May over allegations of so-called “greenwashing” in its ESG funds. Separately, the SEC opened a probe of DWS last year.

Regulatory reckoning

The ESG crackdown comes even before the SEC enacts new regulations that would force funds calling themselves “ESG,” “green,” “sustainable,” or “low carbon” to market themselves more accurately and disclose their practices. “I believe these are the first ripples of a wave of regulatory interventions that we are likely to see in the coming months,” Sonali Siriwardena of Simmons & Simmons told Bloomberg. “It’s no surprise that the regulators want to set expectations to maintain market credibility.”