Cracking Down on a Wall Street Trend: E.S.G. Makeovers
In early 2018, Goldman Sachs gave one of its decades-old mutual funds a makeover.
It had been invested in the stocks of large European and Japanese companies across many industries, but suddenly it became the Goldman Sachs International Equity ESG Fund. Its new investing mandate: choose foreign companies with the best reputations on environmental, social and governance policies.
E.S.G.-fund makeovers have become the trend du jour on Wall Street: BlackRock, J.P. Morgan, Morgan Stanley, HSBC, WisdomTree, Putnam and MassMutual have all done it. Over the past five years, about 90 mutual funds and E.T.F.s have undertaken similar revamps, according to the mutual fund rating firm Morningstar. And Wall Street firms have started up hundreds of brand-new E.S.G. dedicated funds — seeking to cash in on growing investor demand for such investments.
Overall, there are currently 588 sustainable funds and E.T.F.s in the United States, according to Morningstar — an increase from 203 in 2017. The assets in them have grown to $296 billion from $70 billion.
But what may have seemed like a harmless marketing move is now causing some eyebrow raising: Securities regulators are starting to question whether their do-gooder claims are real or fraudulent, at the same time that regulators are seeking to enact new rules and guidelines for what constitutes an E.S.G. investment product or strategy.
https://www.nytimes.com/2022/09/17/business/dealbook/esg-wall-street.html