DWS of Deutsche Bank Sued Over 'Confusing' ESG Claim
A German consumer organisation is suing Deutsche Bank's asset-management unit, DWS, for allegedly misrepresenting the green credentials of an investment fund in marketing materials.
The lawsuit, which was filed at the end of last month about the DWS Invest ESG Climate Tech fund, says that the asset manager's marketing materials say the fund doesn't invest in coal but that it may own companies that get 15% of their revenue from coal.
“The question is if this is clear to everyone,” said Niels Nauhauser, who oversees financial topics at the group, according to the wire service.
DWS said it takes great care in preparing its marketing materials.
“We have examined the documents in focus in detail and remain convinced that the DWS advertising communications … comply with the legal requirements,” DWS said in a statement.
Jefferies data showed that asset managers rolled out far fewer new environmental, social, and governance (ESG) funds this year than in the past.
According to reports, funds reclassified to include an ESG element are down 84% year-on-year. Meanwhile, new ESG funds created from scratch declined by 60% within the same period.
“Increased regulatory scrutiny and enforcement in this market is changing behaviour,” Jefferies analysts said in a report.
DWS’s ESG claims have long been in question. Desiree Fixler, who used to be the company's chief sustainability officer, said that the company lied in its 2020 annual report when it said that €459 billion, or more than half of the company's total assets, were "ESG integrated."
Reports say that DWS denied doing anything wrong but changed its ESG-qualifying standards. As a result, €115 billion in assets are labelled "ESG" in the company's annual report for 2021.
Fixler was sacked in March 2021, and colleagues were told in a memo that her section had not made enough progress. Fixler filed a claim for wrongful termination, but the case was dismissed in January.
In May, the German financial regulator BaFin raided the offices of DWS in Frankfurt because of claims that the company was greenwashing. Those allegations prompted the asset-management firm’s CEO, Asoka Wöhrmann, to resign.
“The definition of 'sustainable investment’ leaves too much room for interpretation,” Hortense Bioy, global director of sustainable research at Morningstar, said. “Different interpretations ... have led asset managers to adopt different approaches to the calculation of sustainable investment exposure, rendering it impossible to compare products directly.”
Source: Banking Dive