Stockholm (NordSIP) – German asset management firm DWS has been hit with a €25 million fine in its home market after Frankfurt prosecutors found it guilty of greenwashing. The €1 trillion asset manager, which is majority-owned by Deutsche Bank and is the largest retail manager in Germany, had been the subject of a lengthy investigation into alleged misleading claims regarding the sustainability credentials of some of its products.
According to the Frankfurt state prosecutor’s office, DWS’ claims to be an ‘ESG leader’ were unsubstantiated. In a whistleblower-prompted investigation that lasted almost 4 years, DWS’ investment funds were found to lack the characteristics to support its purported integration of ESG factors.
The company’s marketing campaign that ultimately led to the latest fine ran from 2020 until the start of 2023 and included claims that ESG was part of DWS’ DNA. The marketing statements were found to amount to greenwashing and therefore to be in breach of German financial market regulations.
DWS fined on both sides of the pond
The action taken by German authorities mirrors a similar investigation into DWS’ activities in the United States (U.S.), which led to a $25 million settlement between the German asset manager and the U.S. Securities and Exchange Commission (SEC) in 2023 over misstatements about its ESG integration as well as failures in its anti-money laundering procedures.
At the time, the DWS noted that the “SEC ESG Order, following an extensive two-year examination, [found] no misstatements in relation to our financial disclosures or in the prospectuses of our funds. We have consistently stated that we stand by our financial disclosures and disclosures in our fund prospectuses. The Order also makes clear that there was no intent to defraud, and the weaknesses identified by the SEC are in relation to processes and procedures that the firm has already taken steps to address.” Instead, the German asset manager emphasised that “the Order focuses on the fact that DIMA lacked processes and procedures to evidence that such integration was documented in a consistent manner.”
Although DWS did not fully acknowledge the SEC’s 2023 case this time around, the firm went a little further in reacting to the latest fine by describing some of its prior marketing as somewhat overenthusiastic in a formal statement. “We accept the fine issued by the Frankfurt Public Prosecutor’s Office. In recent years, we have already publicly acknowledged that in the past our marketing was sometimes exuberant. We have already improved our internal documentation and control processes, and we continue to do so,” DWS said.
According to DWS, it had already made sufficient provision for the €25 million fine and has taken the necessary steps to ensure future compliance with anti-greenwashing regulations.
