The public prosecutor’s office in Frankfurt has imposed a €25m fine on DWS after accusing the German asset manager of greenwashing, it said today.
The Frankfurt Public Prosecutor’s Office has issued the fine against DWS Group and DWS Investment as part of an investigation conducted jointly with the Federal Criminal Police Office in Wiesbaden on suspicion of “greenwashing”, the prosecutor said in a statement.
The prosecutor added that the asset management companies had “intensively” advertised products with certain environmental and social (ESG) characteristics between mid-2020 and the end of January 2023, giving an impression of DWS Group’s supposed market-leading position in sustainable financial products that was not, or not fully, fulfilled by the business organisation itself.
The companies were still going through a transformation process, which was certainly not complete at that time, and statements such as being a “leader” in the ESG field or “ESG is an integral part of our DNA” made by DWS did not correspond to reality, the prosecutor explained as reasons for imposing the fine.
DWS said in a statement that it welcomes the fact that the investigation by the public prosecutor in Frankfurt has ended, adding that the public prosecutor’s office has found a “negligent administrative offence” and imposed the fine.
“This is based on DWS’s past deficiencies with regard to certain ESG-related documentation and control processes, procedures, and marketing statements,” DWS added.
The asset manager has accepted the fine imposed by the public prosecutor’s office, underlining that it has already publicly acknowledged in recent years the use of lavish marketing in the past.
DWS has worked to improve internal documentation and control processes, and it will continue to work on making further progress in this regard, it added. “We have cooperated fully throughout the investigation.”
The agreement reached with the public prosecutor’s office will not have an impact on DWS’s financial results for the first quarter of 2025, as it has already set aside corresponding provisions, the firm stated.
In 2022, officials from the public prosecutor’s office, the supervisory authority BaFin and the German federal criminal police raided the offices of Deutsche Bank and DWS on suspicion of greenwashing.
At the time, the prosecutor said that “sufficient factual indications” emerged, pointing to the fact that, contrary to the information in the sales prospectuses of DWS funds, ESG factors were only taken into account in a minority of the investments.
The raid shook the asset manager, with Asoka Wöhrmann, chief executive officer of DWS Group, resigning and handing over his seat to Stefan Hoops, previously head of the corporate bank (Deutsche Bank).
DWS has been accused of overstating the ESG criteria of its investment products in different instances in the past.
It settled a greenwashing court case with the consumer watchdog in Baden-Württemberg – Verbraucherzentrale Baden-Württemberg – through a cease-and-desist declaration, refraining from marketing certain features of its Invest ESG Climate Tech fund as sustainable.
In September 2023, DWS was fined $19m by the US Securities and Exchange Commission (SEC) for marketing itself as a leader in ESG while making misleading statements about controls for incorporating research and investment recommendations for ESG-integrated products. A further $6m was levied for anti-money laundering violations, taking the total penalty to $25m.
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