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    DWS Raid Highlights Risks of Greenwashing

    Stockholm (NordSIP) – (Updated post) Earlier this year, a German labour court dismissed a lawsuit against Deutsche Bank’s asset management arm, DWS, following greenwashing allegations by its former Group Sustainability Officer, Desirée Fixler. Yet, apparently, the investigation is still ongoing. In a dramatic turn of events, on 31 May, law enforcement officials in Frankfurt raided the offices of Deutsche Bank and DWS. The Frankfurt public prosecutor’s office confirms that the raid was “triggered by reports in the international and national media that the asset manager DWS when marketing so-called ‘green financial products’ had sold these financial products as ‘greener’ or ‘more sustainable’ than they actually were”.

    What the authorities have uncovered so far is that DWS’s information to its clients that ESG factors are taken into consideration in most of their investment funds is grossly overstated. Suspecting capital fraud was enough to send 50 officials from German regulator BaFin, the federal criminal police office and the public prosecutor’s office to search the premises.

    “We have cooperated continuously and extensively with all relevant regulatory authorities on this matter and will continue to do so,” comments a spokesperson for DWS. Deutsche Bank, which owns just about 80 % of DWS, is not accused of greenwashing. However, as the bank shares some IT systems and facilities with DWS, its premises were also raided.

    It is worth noting that since Fixler first accused DWS of greenwashing, the asset manager has changed the statements about its green investments considerably. In its latest annual report, DWS reported only EUR 115 billion in ‘ESG assets’ for 2021, 75 % less than a year earlier. For 2020 the asset manager stated that EUR 459 billion of its assets under management were ‘ESG integrated’.

    Just the day after the raid, on 1 June, DWS Group announced that Asoka Woehrmann has decided to resign at the end of the Annual General Meeting on 9 June. Stefan Hoops, previously the Head of the Corporate Bank at Deutsche Bank will become its new CEO. Judging by the press release, the resignation is a direct consequence of the greenwashing allegations. “The allegations made against DWS and myself in past months have become a burden for the company, as well as for my family and me. In order to protect the institution and those closest to me, I would like to clear the way for a fresh start,” writes Woehrmann.

    Undoubtedly, investment managers worldwide are watching closely the development of the DWS case that highlights greenwashing as a serious and, potentially, punishable offence. Misleading clients about one’s environmental credentials is no longer a risk-free marketing exercise.

    Image courtesy of Deutsche Bank
    Julia Axelsson, CAIA
    Julia Axelsson, CAIA
    Julia has accumulated experience in asset management for more than 20 years in Stockholm and Beijing, in portfolio management, asset allocation, fund selection and risk management. In December 2020, she completed a program in Sustainability Studies at the University of Linköping. Julia speaks Mandarin, Bulgarian, Hindi, Russian, Swedish, Urdu and English. She holds a Master in Indology from Sofia University and has completed studies in Economics at both Stockholm University and Stockholm School of Economics.

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