Greenwashing could be rife in asset management
Greenwashing could be rife within the asset management industry, as experts say the raid on DWS in Germany is unlikely to be a one-off.
About 50 German police officers raided the Frankfurt office of fund manager DWS last month as part of an investigation into greenwashing. The asset manager’s chief executive Asoka Woehrmann resigned the day after police arrived to gather materials and question staff.
The firm had been in the sights of regulators in Germany and the US since former executive-turned-whistleblower Desiree Fixler accused the firm of greenwashing last year.
Greenwashing could be rife within the asset management industry, as experts say the raid on DWS in Germany is unlikely to be a one-off.
About 50 German police officers raided the Frankfurt office of fund manager DWS last month as part of an investigation into greenwashing. The asset manager’s chief executive Asoka Woehrmann resigned the day after police arrived to gather materials and question staff.
The firm had been in the sights of regulators in Germany and the US since former executive-turned-whistleblower Desiree Fixler accused the firm of greenwashing last year.
Assets managed in ESG-labelled funds have ballooned to around $2.7tn globally, but the industry has also been hit by claims its green credentials are inflated. And with regulatory scrutiny growing on both sides of the Atlantic — and an army of lawyers primed to pursue allegations of mis-selling — few believe the shakeout will end with DWS.
“There’s nothing to suggest DWS is a one-off,” said Fiona Huntriss, a partner at legal firm Pallas which specialises in financial litigation. “I think it’s almost inevitable litigation will be brought in lots of different jurisdictions.”
“Where you’ve got statements and documents that are highly regulated [that have been given] to a group of investors who can then work together to litigate against that, that is prime territory for mis-selling claims,” she said.
Regulators across Europe and the US are gearing up to tighten requirements and crack down on overhyped claims, including taking aim at the metrics underpinning ESG ratings.
It emerged last week that the SEC is investigating Goldman Sachs’ asset management division over certain environmental, social and governance claims made by its funds. Goldman Sachs declined to comment.
DWS has modified ESG criteria since Fixler made her revelations public. The amount of “ESG assets” reported in its latest annual report, released in March, were 75 per cent below the €459bn it had said were “ESG integrated” a year earlier. The group has denied wrongdoing.
The FT (£)
