Deutsche Bank asset manager DWS raided for greenwashing
German prosecutors raided Deutsche Bank’s majority-controlled asset manager DWS and the bank’s own headquarters this week, because of allegations that is has been misleading investors about “green” investments, the prosecutors reportedly told news agency Reuters.
This case appears to underline again how pretending to be greener than you actually are can potentially pose a greater reputational risk than being honestly un-green. If the prosecutors’ accusations prove to be correct, Germany’s leading bank will have again embarrassed itself after a string of headline-grabbing scandals in recent years.
According to Reuters, DWS and Deutsche Bank said the asset manager had cooperated with regulators and authorities in the past and would continue to do so. DWS reportedly repeated its denial that it had misled investors.
The prosecutors revealed that they had decided to follow up news reports and a whistleblower’s allegations that DWS sold investments as “greener” or “more sustainable” than they were. The asset manager has been accused of “greenwashing” since at least last August, but now the evidence is seemingly firm enough for the authorities to act.
According to Reuters, the German prosecutors said “sufficient factual evidence has emerged” that ESG factors were taken into account in a minority of investments “but were not taken into account at all in a large number of investments”, contrary to statements in DWS fund sales prospectuses.
The US Securities and Exchange Commission and German financial watchdog BaFin launched separate investigations in 2021 into allegations made by DWS’s former head of sustainability that the company was overstating how it used sustainable investing criteria to manage investments.
Reuters said the German prosecutors’ statement was the first time that it had said publicly it was involved in the investigation.
Reuters reported that DWS said it would work “with any authorised bodies to clarify any and all queries they may have”.
“We understand a variety of actions are required to ensure a thorough and complete investigative process,” DWS reportedly added.
Reuters reported that there were about 50 people involved in Tuesday’s raid on DWS, including officials from BaFin and federal police.