DWS Facing Fraud Allegations Over "False" ESG Statements

Issue 125

German banks DWS and its majority owner Deutsche Bank were raided by law enforcement on Tuesday morning due to allegations of greenwashing.Around 50 officers arrived at the two locations in Frankfurt Tuesday morning and held meetings with the staff as part of the probing process.

Neither of the banks was given advance notice of the operation and the interviews lasted until lunchtime.German financial regulator BaFin launched its investigation into the two banks following a similar probe by the U.S. Securities and Exchange Commission prompted by allegations coming from DWS’ former executive Desiree Fixler claiming the banks partook in greenwashing.

Greenwashing is when an organization makes false claims about its environmental standards and practices. Fixler’s claim was that the two banks made false claims within a 2020 annual report stating that $900 billion were invested into environmental, social, and governance practices.ESG has been a hot topic throughout financial institutions as the financial risk of climate change and failure to abide by ESG compliance standards has concerned organizations around the globe.

Deutsche, which owns 80% of DWS, confirmed the occurrence of the raid by law enforcement despite not being accused of greenwashing itself. As far as the claims against DWS, the prosecutor's office stated that “After examination, sufficient factual evidence has emerged that, contrary to the statements made in the sales prospectuses of DWS funds, ESG factors were not taken into account at all in a large number of investments.” The office continued and labeled the potential wrongdoing as “prospectus fraud.”

Source: Financial Times