David Solomon, chairman and CEO of Goldman Sachs, has reassured investors about the positive company culture at the $118 bn financial services powerhouse amid claims of high partner turnovers.
During the firm’s annual investor day, held on February 28, 2023, Solomon faced investors during the final Q&A segment of the event. Taking a question from the audience, he addressed claims of poor company culture and poor media attention, saying, ‘I hate the noise. I live in the same neighborhood you all live in and I hate the noise. I wish the noise was different’.
The media attention refers to the company’s restructuring decision in January this year, which saw the conglomerate cut more than 3,000 jobs from its New York and London and Hong Kong offices.
‘We recognize that we’ve gone through a very unusual period over the last three years,’ Solomon said. ‘I think the pandemic was very tough on a culture like ours: the separation, the lack of coming together – this is such a human business.
‘We’ve made conscious decisions to take some actions to reinvest and spend more time on investing in the culture. I read things in the paper; they don’t match with what I know, factually, inside the firm.
‘We’re going to continue to invest in our culture. I feel good about the partnerships, good about the culture, but that doesn’t mean we don’t have to keep investing and working on it. We will, that’s our job.’
Shifting the conversation toward the firm’s ESG ambitions, Solomon said the strategy focuses more broadly on sustainability, but also on the wider ESG metric mindset. He said the company is working through the metric alongside its clients, which are ‘very, very focused on their own transitions and how they evolve.’
In November last year, the investment banking company’s asset management division was charged $4 mn by the SEC for greenwashing claims involving two mutual funds and one separately managed account strategy. The SEC’s penalty was due to failings between April 2017 and February 2020, during which Goldman had policies and procedure failures involving the ESG research its investment teams used to select and monitor securities.
Sanjay Wadhwa, deputy director of the SEC’s division of enforcement and head of the climate and ESG task force, said at the time: ‘In response to investor demand, advisers like Goldman Sachs Asset Management are increasingly branding and marketing their funds and strategies as ESG.
‘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.’
Since then, the asset management business has had a ‘series of products’ that are ESG-aligned, Solomon said at the investor day: ‘There are opportunities across the firm and as that market cycle and capital allocation is directed toward certain sustainable activities, we will participate in that.’