Are you greenwashing by overstating the ESG impact of your funds ? And maybe, in the process, did you fire your not-so-cooperative Sustainability Officer ?
Then, probably, and after DWS—suspected by US authorities—, the regulator is coming for you.
The Wall Street journal reported last week that the U.S. authorities are investigating DWS Group. The asset manager of the Deutsche Bank, is suspected of having overstated the ESG performance of its sustainable investments, following information and documents disclosed by Desiree Fixler, a fired executive. The news leads to -14% for DWS on August the 26th.
The WSJ considers this US authorities’ investigation an “important first step in crackdown on ethical-investing claims“, but the DWS case is the very tree that hides the forest…
Soon after, the release of a report from InfluenceMap draw the attention to several other financial US and EU actors, including BlackRock, UBS, State Street, and Mediobanca, notably. The think tank, which screened 723 ESG and climate-related equity funds with over $ 330 bn AUM, demonstrates that nearly 70%, are actually inconsistent… i.e. the vast majority!
But, for an ESG insider, there is nothing new here—and this is what was expected to happen. Indeed, last January, in a previous article—An ESG bubble on the rise?—we hightlighted the fact that, without controls from an authority and due to a lack of standardization, among others, self-proclaimed ESG funds are easy to market, and sell, thanks to high levels of demand…
Fighting greenwashing is precisely one of the main objectives of a regulatory initiative such as the EU Taxonomy (cf. our article: Taxonomy vs. Greenwashing: 14 key takeaways on EU webinars). After the summer break, we are all back to work: a great occasion for the AMs to eventually start to truly look at the real ESG impact of their Sustainable Funds, maybe with the help of real experts in the field, in order to comply with the regulations, and meet the ESG end-investors’ expectations…
Otherwise, remember that, in the end, the Regulatory Boogeyman is coming for you, too…
- P. Kowsmann, K. Brown — Fired Executive Says Deutsche Bank’s DWS Overstated Sustainable-Investing Efforts, Asset management arm painted a rosier-than-reality picture to investors on ESG, according to Desiree Fixler and documents. DWS says her office didn’t gain expected traction, Aug. 1, 2021.
- P. Kowsmann, C. Ramey and D. Michaels — U.S. Authorities Probing Deutsche Bank’s DWS Over Sustainability Claims Investigation by Justice Department, SEC follow allegations from ex-sustainability chief that firm overstated efforts on environment, other issues, The Wall Street Journal, Aug. 25, 2021.
- R. Toplensky — The Regulators Are Coming After Sustainable Investing, U.S. investigation into Deutsche Bank’s asset manager DWS is important first step in crackdown on ethical-investing claims, The Wall Street Journal, Aug. 26, 2021.
- ANSA — Deutsche Bank:DWS -14% in Borsa su ESG, Sec e Bafin indagano Dubbi su ‘etichetta’ investimenti sostenibili, ANSA.it, 26 Aug. 2021.
- ANSA — Finanza: 70% fondi Esg incoerenti, bocciate Ubs e Blackrock, ANSA.it, 28 Aug. 2021.
- InfluenceMap, Climate Funds: Are They Paris Aligned? An analysis of ESG and climate-themed equity fund, An InfluenceMap report, August 2021