The consumer association in Baden-Württemberg (Verbraucherzentrale Baden-Württemberg) has filed a lawsuit before the regional court in Frankfurt against DWS for greenwashing, it said.
The court hearing will take place on 10 March 2023, a spokesperson for the association told IPE.
The consumer association is accusing DWS to have misled investors, saying that the DWS Invest ESG Climate Tech Fund excludes companies active in controversial sectors such as coal or defense equipment.
Explaining the reasons for the lawsuit, the association noted that DWS did not explain transparently how it obtained information on the invested companies to come to the conclusion that they did not operate in those sectors.
Moreover, the association added in a statement, it is not certain that the companies held in the fund do not generate part of their revenues from business activities in controversial sectors.
“Investors are led to believe [by the sale prospectus of the DWS fund] that they invest zero percent in coal, while the companies held in the fund are allowed, for example, to generate up to 14.99% in revenues [with activities] in the coal industry,” said Niels Nauhauser, head of the department for pensions and banks at the consumer association in Baden-Württemberg.
The association is also blaming DWS for saying that the holdings in funds generate 90% less CO2 emissions than the companies in the benchmark, but without explaining clearly how CO2 emissions are calculated.
“ESG data is based to a large extent on self-disclosures by companies, which cannot be verified,” Nauhauser added.
The DWS Invest ESG Climate Tech Fund, launched in 2018 with assets worth €744m as of September this year, invests in companies globally whose business activities are primarily aimed at preventing climate change or mitigating its effects, according to a DWS report.
Investments focus on companies contributing to sustainable energy generation, the expansion of efficient energy networks, increasing energy efficiency and thus reducing greenhouse gases, on the healthcare sector, water and agriculture management and civil protection.
Close to three quarters of the assets are invested in companies with business models that help fight the causes of climate change, and about a quarter in companies that help adjust to “climate symptoms”, according to the DWS report.
A DWS spokesperson said the asset manager rejects the criticism by the consumer association, adding: “We have carefully examined the documents [of the fund in question] and remain convinced that the communication criticised by the consumer association meets legal requirements.”
The spokesperson added that, with regard to ESG, DWS’ goal is to present to investors products transparently and clearly, continuing to regularly review and improve the material used to promote the products.
DWS was in the spotlight earlier this year for alleged greenwashing, and officials from the public prosecutor office in Frankfurt, the supervisory authority BaFin and the German federal criminal police raided offices of Deutsche Bank and of the asset manager.
The public prosecutor at the time believed that “sufficient factual indications” emerged pointing to the fact that ESG factors were only taken into account in a minority of the investments, in contrast to the information provided in sales prospectuses of DWS funds.
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