German Prosecutors Fine DWS Millions Over Greenwashing Claims

Asset management firm DWS has been fined 25 million euros (approximately $27 million) by German prosecutors following an extensive investigation into allegations of greenwashing. The Frankfurt state prosecutor's office announced on Wednesday that the Deutsche Bank subsidiary was found to have made misleading statements regarding its environmental, social, and governance (ESG) investing credentials.

The prosecutors stated that DWS had publicly presented itself as a "leader" in ESG investing and claimed it was an integral part of the company's DNA. However, the investigation concluded that these claims "did not correspond to reality" and that investors were misled between mid-2020 and the end of January 2023. The fine is for breaches of German financial investment laws.

DWS acknowledged the fine, stating that the prosecutor's office had identified a "negligent infringement." The company also noted that the financial penalty would not impact its first-quarter results as provisions had already been made.

"In recent years, we have already publicly acknowledged that...our marketing was sometimes exuberant," DWS said in a statement. "We have already improved our internal documentation and control processes, and we continue to do so."

This development follows a previous settlement in the United States in 2023, where DWS agreed to pay $25 million to resolve charges related to misstatements about ESG investing and failures in anti-money laundering policies.

The greenwashing accusations against DWS first surfaced in 2021, sparked by a whistleblower, Desiree Fixler, who had joined the company as group sustainability officer in 2020. Fixler alleged that DWS misrepresented the environmental credentials of its investments before her departure in 2021. The controversy led to the resignation of DWS's CEO at the time, Asoka Woehrmann, after German authorities raided the offices of DWS and Deutsche Bank.