Introduction
FRANKFURT, April 2 (Reuters) - German prosecutors have fined DWS, an asset manager owned by Deutsche Bank, 25 million euros for greenwashing, following a lengthy investigation that revealed misleading claims about its environmental and social investment practices.
Context
The Frankfurt state prosecutor's office stated that DWS falsely claimed to be a "leader" in environmental, social, and governance (ESG) investing, misleading investors from mid-2020 to January 2023. The fine was imposed for breaches of German financial investment laws, while DWS acknowledged a "negligent infringement."
Developments
- This penalty follows a $25 million settlement DWS reached in the United States earlier in 2023 related to similar misstatements about ESG and shortcomings in anti-money laundering policies.
- DWS has accepted the fine and indicated it would not impact its first-quarter results due to prior provisions.
- DWS admitted that its marketing had been overly optimistic in recent years and noted improvements in its internal processes.
- At 1307 GMT, its shares fell 2%, underperforming a 1.4% decline in the European banking index.
In 2021, investigations began after a whistleblower raised concerns about DWS's representation of its funds' environmental impact. Desiree Fixler, who served as DWS's group sustainability officer, alleged that the company misrepresented its green investments before leaving in 2021. The then-CEO, Asoka Woehrmann, who described the allegations as "unfounded," also resigned amid the scrutiny.
Conclusion
Globally, regulators are intensifying efforts to combat greenwashing to enhance the transparency of investment sustainability claims. DWS, which is 80% owned by Deutsche Bank, manages approximately 1 trillion euros in assets.