Jamie Spencer
Asset manager misled investors over ESG claims
German prosecutors have fined asset management firm DWS €25 million ($27 million) after a lengthy investigation found the company guilty of greenwashing—misleading the public about its environmental and social investment practices.
DWS, which is majority-owned by Deutsche Bank, had claimed it was a “leader” in environmental, social, and governance (ESG) investing and that ESG principles were part of its core identity. But prosecutors from Frankfurt stated on Wednesday that these claims “did not correspond to reality” and that DWS had misled investors from mid-2020 through January 2023.
The fine, issued for breaches of German financial investment laws, marks the conclusion of a probe that began in 2021. DWS acknowledged the decision in a statement, calling it a “negligent infringement” and noting that financial provisions for the penalty had already been made, so it would not impact its Q1 results.
“In recent years, we have already publicly acknowledged that … our marketing was sometimes exuberant,” DWS said. “We have already improved our internal documentation and control processes, and we continue to do so.”
Repeat offense in ESG misrepresentation
This is not the first time DWS has been penalized for ESG-related misstatements. In 2023, the firm agreed to pay $25 million in the U.S. to settle charges over misleading ESG marketing and lapses in anti-money laundering protocols.
Shares in DWS dropped 2% on Wednesday afternoon, underperforming the broader European banking index, which fell by 1.4%.
Whistleblower sparked global scrutiny
The investigation was launched after whistleblower Desiree Fixler, a former group sustainability officer at DWS, accused the firm of exaggerating its ESG credentials. Fixler joined in 2020 and left the company in 2021, later providing information to regulators and media alleging that DWS’s marketing did not align with internal ESG practices.
The scandal ultimately led to the resignation of then-CEO Asoka Woehrmann following a 2022 raid of DWS and Deutsche Bank’s Frankfurt offices by German prosecutors. Woehrmann has denied wrongdoing, calling the allegations “unfounded.”
Regulatory pressure on greenwashing
Global regulators have increasingly cracked down on greenwashing in the financial industry to ensure transparency and investor protection regarding sustainable investments.
DWS, which manages around €1 trillion in assets and is 80% owned by Deutsche Bank, said it remains committed to improving its internal controls and ESG transparency moving forward.
