DWS to Pay Millions in Fines Over "Greenwashing" Allegations
Die Deutsche-Bank-Fondsgesellschaft DWS must also pay a fine of millions in Germany due to "greenwashing" allegations. The public prosecutor's office in Frankfurt, which investigated on suspicion of investment fraud, imposed a fine of 25 million euros. DWS has long been accused of selling so-called green financial products as "greener" than they actually are - hence "greenwashing".
"We welcome the fact that the investigations by the public prosecutor's office in Frankfurt am Main against DWS have now been concluded," DWS announced. "We have already publicly stated in the past years that our marketing was sometimes excessive. We have already improved the internal documentation and control processes and will continue to work on making further progress here."
In recent years, the demand from investors for sustainable investments has increased. Large investors place more value on clean investments - also under pressure from the EU, which has created a kind of seal of approval for sustainable financial products with its taxonomy. The fund industry has launched a large number of ESG products. However, it is sometimes unclear to outsiders what exactly is counted as sustainable investments.
In search of evidence, prosecutors searched the fund company's offices in Frankfurt several times. DWS had always rejected the allegations. However, in June 2022, the boss was replaced: Asoka Wöhrmann was followed by Deutsche Bank manager Stefan Hoops.
From mid-2020 to the end of January 2023, DWS had been actively advertising products with environmental and social characteristics (ESG). ESG stands for Environment, Social and Governance and is intended to indicate the consideration of ecological and social aspects in companies.
According to the findings of the Frankfurt public prosecutor's office, however, the impression of DWS Group as a market leader created in the capital market was not fulfilled: marketing statements such as "ESG is an integral part of our DNA" did not correspond to reality.
Authorities in the USA had also investigated the "greenwashing" allegations. At the end of September 2023, the US Securities and Exchange Commission (SEC) ordered DWS to pay a total of 25 million dollars (then 23.5 million euros) "for violations of anti-money laundering guidelines and false statements about ESG investments".
Mauricio Vargas, financial expert at the environmental organization Greenpeace, sees the fact that the German judiciary is now following suit as a success: "This historically high fine for greenwashing is a clear wake-up call for the entire industry: consumer deception is not a minor offense, but fraud."