$25 mln U.S. fine for German fund manager is sustainable finance “wake-up call” – NGO

Environmental NGO Greenpeace Germany has hailed a fine for the fund management company DWS in the U.S. as a “success” in the fight against greenwashing in the sustainable finance sector. U.S. financial authority SEC had imposed a fine of 25 million dollars on DWS, which is controlled by Deutsche Bank. “The high fine demonstrates that misleading consumers in environmental topics is not a petty crime,” Greenpeace’s finance expert Mauricio Vargas commented. The SEC’s fine should serve as “wake up-call” to DWS’s customers, who had to ask themselves whether they want to finance “this kind of scandalous business practices,” Vargas said. Institutional investors should take the penalty as an opportunity to thoroughly reassess their approach to environmental issues in finance, he added.

DWS said it was “pleased to have resolved” the issue with the American authorities, which related to “certain historic processes, procedures and marketing practices the firm has since addressed.” The company said it had scrutinised its internal rules for communicating its approach to the ESG (environmental, social, governance) sustainable finance principles and worked on its financial disclosures to improve compliance with financial regulations. The Deutsche Bank subsidiary stressed that the SEC did not find fault with the integration of ESG principles in the U.S., but that it rather “lacked processes and procedures to evidence that such integration was documented in a consistent manner.”

Financial supervisory authorities in the U.S. and Germany have investigated DWS’s business practices, relating particularly to potential greenwashing in customer communication and disclosure. In Germany, investigators were helped by an internal whistleblower from the company saying that DWS’s sustainable finance claims were largely overstated.