German police stormed the offices of DWS and its majority owner Deutsche Bank on Tuesday morning as part of an investigation into allegations of greenwashing the asset manager.
About 50 officers arrived at DWS facilities and Deutsche Bank’s twin towers in central Frankfurt in the middle of the morning and held meetings with staff until lunchtime, according to people familiar with the operation. No company received prior notice of the attack, which involved Frankfurt prosecutors, federal police and officials from German financial regulator BaFin.
BaFin launched an investigation into DWS following a similar investigation by the U.S. Securities and Exchange Commission, which was motivated by allegations from DWS executive Desiree Fixler.
Fixler said the company had made misleading statements in its 2020 annual report on claims that more than half of the group’s $ 900 billion assets were invested using environmental, social and government criteria.
The issue of greenwashing, where companies make misleading statements about their environmental credentials, has become one of the most debated topics in investment management.
ESG has also become a hot topic in its own right. HSBC’s asset management business suspended Stuart Kirk, its global head of responsible investment, this month after questioning the financial risks of climate change at a Financial Times conference.
“We have fully cooperated continuously with all relevant regulators and authorities on this issue and will continue to do so,” DWS said in a statement on Tuesday. Deutsche Bank, which owns just under 80% DWS, confirmed the attack in a separate statement. Although they were not accused of greenwashing, Deutsche’s facilities were raided because it still shared some computer systems and facilities with DWS, according to a person familiar with the matter.
BaFin declined to comment.
The Frankfurt prosecutor’s office said the search had been “triggered by reports in the international and national media that the DWS asset manager, when marketing so-called ‘green financial products’, had sold these financial products as’ greener’ or ‘ more sustainable ‘. “than they really were”.
“After the examination, there has been enough factual evidence that, contrary to the statements made in the sales brochures of the DWS funds, the ESG factors … have not been taken into account at all in a large number of cases. investments “, added the prosecution, labeling the possible crime of” prospect fraud “.
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Fixler, who had been DWS’s global head of sustainability until he was fired last year, accused the company’s ESG risk management system of being very flawed and said he had reported his concerns to the board. DWS management in November 2020.
Following Fixler’s complaint, DWS changed its ESG criteria. In its 2021 annual report, published in March 2022, DWS recorded only € 115 billion in “ESG assets” for 2021, 75% less than a year earlier, when it stated that € 459 billion in assets were “integrated ESG”.
Tuesday’s attack, which was first reported by Bloomberg, is the first time police have entered DWS offices for investigation, although the group has been in contact with authorities and provided data and electronic communications since the investigation began last summer, it has been reported. people with knowledge of the process.
Just a month ago, federal police, criminal prosecutors and BaFin representatives stormed Deutsche headquarters on separate charges that unnamed bank employees may have violated anti-money laundering laws.
Shares of DWS fell 1.8 percent on Tuesday morning, while those of Deutsche fell 1.9 percent.
Additional report by Alexander Vladkov in Frankfurt
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