A German consumer group is suing Deutsche Bank's asset-management unit DWS for allegedly misrepresenting an investment fund's green credentials in marketing materials, Reuters reported Monday.
The suit, filed late last month in relation to the DWS Invest ESG Climate Tech fund, claims the asset manager’s marketing materials simultaneously indicate the fund invests 0% in coal but that fund holdings may include companies that derive 15% of their revenue from coal.
"The question is if this is clear to everyone," said Niels Nauhauser, who oversees financial topics at the group, according to the wire service.
DWS said it takes great care in preparing its marketing materials.
"We have examined the documents in focus in detail and remain convinced that the DWS advertising communications … comply with the legal requirements," DWS told Reuters in a statement.
A hearing is set for March 10 in the case.
Asset managers rolled out far fewer new environmental, social and governance (ESG) funds this year than before, Jefferies data indicated.
Funds reclassified to add an ESG element are down 84% compared with a year ago, the bank found, according to Bloomberg. New ESG funds built from scratch, meanwhile, fell 60% over the same time frame.
“Increased regulatory scrutiny and enforcement in this market is changing behavior,” Jefferies analysts said in a report.
DWS’s ESG claims have long been in question. The asset manager’s former chief sustainability officer, Desiree Fixler, said the company falsely claimed in its 2020 annual report that €459 billion — more than half of the company’s asset total — was “ESG integrated.”
DWS denied wrongdoing, but nonetheless changed its ESG-qualifying criteria such that €115 billion in assets received the “ESG” label in the company’s 2021 annual report, according to the Financial Times.
Fixler was fired in March 2021, and employees were told in a memo that her unit hadn’t made enough progress, according to Bloomberg. Fixler sued for unfair dismissal but lost the case in January.
Officials from the German financial regulator BaFin participated in a May raid of DWS’s Frankfurt offices in connection with greenwashing allegations. Those allegations prompted the asset-management firm’s CEO, Asoka Wöhrmann, to resign.
“The definition of ‘sustainable investment’ leaves too much room for interpretation,” Hortense Bioy, global director of sustainable research at Morningstar, told Bloomberg last month. “Different interpretations ... have led asset managers to adopt different approaches to the calculation of sustainable investment exposure, rendering it impossible to compare products directly.”
Of 8,017 funds that require a product to promote sustainability, 989 were new at the end of the second quarter, PwC found, according to the wire service. The rest were reclassifications of existing funds. Of 1,061 funds that require a product to have sustainability as its objective, 286 were new, PwC found.