Deutsche Bank’s DWS Group Fined for Greenwashing Allegations

Deutsche Bank’s asset-management arm DWS Group agreed to a fine of 25 million euros, or $27 million to the Frankfurt Public Prosecutor’s office to settle allegations of greenwashing. The allegations were brought by Frankfurt prosecutors after its investigation into the firm’s environmental and social investing credentials.

Greenwashing is when a company overstates its efforts towards its sustainability goals. In other words, a company engages in greenwashing when it deceptively advertises that its products, goals, and policies are environmentally friendly.

According to Frankfurter prosecutors, DWS engaged in greenwashing from mid-2020 to the end of January 2023. “The impression given to the capital market that DWS Group was supposedly the market leader in sustainable financial products was not, or not completely, fulfilled by the business’s organization itself,” the prosecutors said. DWS didn’t monitor the situation carefully enough and instead advertised itself as being a “leader” in the ESG field or incorporating ESG as an “integral part of our DNA.” They didn’t correspond to reality, according to prosecutors.

According to the investigation, the first documented instance of the alleged greenwashing occurred when DWS fired an executive who claimed that the company inflated its sustainability targets to investors. Shortly after, the firm was charged with similar greenwashing allegation by the Securities and Exchange Commission in which it agreed to pay a fine of $25 million. Specifally, DWS was charged for making “materially misleading statements” in connection to its ESG research and investments. The firm did not admit or deny the SEC’s findings.

DWS agreed to the terms of the settlement fine and said that it will not appeal. “We have already publicly stated in recent years that our marketing was sometimes exuberant in the past,” the firm said in a statement. “We have already improved our internal documentation and control processes and will continue to work on making further progress in this area.”