The subsidiary of Deutsche Bank, the second listed asset manager in Europe after Amundi, is targeted by investigations in United States, after a denunciation by its former head of sustainable development. DWS would have overestimated the weight of its outstanding integrating ESG criteria (environmental, social and governance).

This is bombastic news in the asset management industry. It was the Wall Street Journal that ignited the powder when it broke the news on August 25. A new recovery since by many media around the world.

U.S. authorities are investigating Deutsche Bank AG’s asset-management arm, DWS Group, after the firm’s former head of sustainability said it overstated how much it used sustainable investing criteria to manage its assets, according to people familiar with the matter.

The probes, by the Securities and Exchange Commission (SEC) and federal prosecutors, are in early stages, the people said. Authorities’ examination of DWS comes after The Wall Street Journal reported that the $1 trillion asset manager overstated its sustainable-investing efforts. The Journal, citing documents and the firm’s former sustainability chief, said the firm struggled with its strategy on environmental, social and governance investing and at times painted a rosier-than-reality picture to investors.

A spokesperson for the Department of Justice in Brooklyn, which is leading the investigation, declined to speak. An SEC spokesperson declined to comment. A spokesperson for DWS said the company was not commenting on legal or regulatory issues.

These revelations caused the DWS share price to fall, which closed sharply down 13.3% in Frankfurt on Thursday August 26.

In its annual report, published in March, DWS assures that around 459 of the 793 billion euros in assets that the company had under management at the end of 2020 were placed in ESG products.

ESG-labeled investments have become a major asset class as global warming becomes a major social issue. But they are repeatedly accused of serving as a greenwashing tool. Last June, for example, Greenpeace Luxembourg accused so-called green finance of being just deceptive marketing, presenting a study showing that sustainable investment funds hardly divert more capital towards sustainable activities than conventional funds.

According to the Forum  for Sustainable and Responsible Investment (US SIF), approximately $ 16.6 trillion was managed in the United States by professionals who incorporated ESG criteria into their decisions. The Forum nevertheless noted that for more than two thirds, the management was opaque and the ESG criteria adopted were not communicated publicly.

In early August, BaFin, the German financial markets authority, launched a public consultation on draft general guidelines for sustainable investment funds, saying it wants to guard against the risk of greenwashing in asset management.

Publié le 27 août 2021