German asset manager DWS has defended its ESG credentials in response to media reports the group is being investigated by the US Securities and Exchange Commission (SEC) amid concerns of greenwashing.
The reports, initially reported by the Wall Street Journal (WSJ), prompted a 13% fall in Deutche Bank’s share price and has led to BaFin, the German regulator, to launch an investigation into the investment management arm of the bank amid the allegations of breaches of ESG requirements, reports the Financial Times.
WSJ reported US authorities were investigating DWS after a former head of sustainability said it overstated how much it used sustainable investing criteria to manage its assets. An SEC spokesperson did not confirm the probe saying it did comment on “the existence or nonexistence of a possible investigation”.
In a statement released late on Thursday 26 August, DWS said while it does not usually comment on reports relating to litigation or regulatory matters, it wanted to address “unfounded allegations” in the media regarding its ESG disclosures.
“DWS stands by its annual report disclosures. We firmly reject the allegations being made by a former employee. DWS will continue to remain a steadfast proponent of ESG investing as part of its fiduciary role on behalf of its clients,” the statement said.
It added it had been transparent with its reporting differentiating between “ESG Integrated AuM” and “ESG AuM” (which DWS referred to as “ESG Dedicated”) when presenting the assets under management in its Annual Report 2020.
“As we disclosed in our Annual Report 2020 on page 90, DWS labelled strategies as ‘ESG Integrated’ if they were actively managed and included coverage of ESG data (the overall SynRating) on more than 90% of the portfolio. ‘ESG Integrated AuM’ were not counted towards the firm’s ‘ESG AuM’ (‘ESG Dedicated’). The absolute numbers are transparently listed on page 92 and 93 of our Annual Report 2020,” the statement continued.
“In our more recent half-year report published in July 2021, we reported €70.1bn of ESG AuM (‘ESG Dedicated’) after applying our revised ESG product classification approach in accordance with the new SFDR guidelines. In addition, we reported €16.4bn of illiquid green-labelled single assets in non-ESG classified products.
“DWS will continue its path towards becoming a leading ESG asset manager.”
The FT report said Desiree Fixler, who was sacked earlier this year from her role as global head of sustainability at DWS, alleged in an earlier report by the WSJ that misleading statements were made in DWS’s 2020 annual report, published in March, which claimed that more than half of its $900bn assets were invested using ESG criteria.
Fixler, a US citizen whose dismissal is being investigated by an employment tribunal in Germany, reportedly alerted DWS’ management team about her concerns in early November 2020, and claimed an internal assessment she had overseen had found the ESG risk management system employed by DWS was highly flawed because it relied upon outdated technology and used ESG assessments provided by a range of external rating suppliers.