Deutsche Bank’s DWS Rejects Claims It Overstated ESG Assets

(Bloomberg) -- Deutsche Bank AG’s asset manager DWS Group hit back at claims that it overstated the amount of assets that comply with sustainability criteria after the news of probes by U.S. and German authorities into the allegations sent the shares plunging.

“DWS stands by its annual report disclosures,” the firm said in a statement late on Thursday. “We firmly reject the allegations being made by a former employee. DWS will continue to remain a steadfast proponent of ESG investing.”

Earlier on Thursday, DWS had plunged as much as 14.2% after revelations that Germany’s financial markets regulator BaFin and U.S. prosecutors were probing claims by former sustainability executive Desiree Fixler that DWS had overstated the amount of assets adhering to social and environmental criteria. The stock decline was the steepest since the onset of the covid pandemic whipsawed markets in March last year. 

Before Fixler was fired, she alerted DWS that a publicly-communicated figure for ESG assets was false, according to an argument for a Frankfurt court prepared by her lawyer in May related to her claim of unfair dismissal. She also told the company that “only a small number of the active portfolio managers embed and document ESG-integration factors,” the lawyer wrote in the letter seen by Bloomberg. 

Fixler didn’t immediately reply to a LinkedIn request for comment, and her attorney declined to comment beyond confirming the authenticity of the letter. 

At the end of 2020, DWS labeled 459 billion euros ($540 billion) of assets as “ESG Integrated,” more than half its total portfolio. That compared with 75.6 billion euros of assets it labeled as “dedicated ESG” at the time.

“We have always been clear in our reporting: At DWS, we differentiated between ‘ESG Integrated AuM’ and ‘ESG AuM’ which DWS referred to as ‘ESG Dedicated’ when presenting the assets under management in our Annual Report 2020 and reported both classifications,” it said in its statement Thursday. “DWS strives to always be transparent to the market, our clients and stakeholders in our message that the road to a sustainable future is long and hurdled,” it said.

DWS shares slipped further on Friday, down 0.9% at 35.70 euros as of 12:01 p.m.

The probe adds to existing legal headaches for Deutsche Bank Chief Executive Officer Christian Sewing as he seeks to take advantage of the fast-growing trend for investments that aim to further environmental or social goals. The lender has also been criticized by the U.S. Federal Reserve for failings in its controls, while BaFin has boosted its money-laundering monitor at the bank. There’s also an internal investigation into whether it mis-sold foreign-exchange derivatives.

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