DWS refutes ESG misrepresentation claims

DWS Group is refuting allegations made by its former head of sustainability that the firm misrepresented its ESG investing.

Deutsche Bank is a majority owner of DWS, which has €859 billion ($1 trillion) in assets under management.

Allegations made by the former employee, Desiree Fixler, against DWS are being investigated by Germany's Federal Financial Supervisory Authority, known as BaFin, a person familiar with the process said. While it does not comment on individual companies, BaFin does investigate if there are indications that a fund's ESG guidelines have been violated, the source said.

Ms. Fixler joined DWS as its first group sustainability officer in June 2020. At the time, DWS called her appointment "a significant milestone.''

DWS said in a statement that it does not comment on litigation or regulatory matters, but it "wants to address unfounded allegations being reported in the media on its ESG disclosures: DWS stands by its annual report disclosures. We firmly reject the allegations being made by a former employee."

The statement added: "DWS will continue to remain a steadfast proponent of ESG investing as part of its fiduciary role on behalf of its clients. DWS has a long tradition of sustainable and responsible investing going back well over 20 years."

The statement noted that DWS recently defined ESG as a cornerstone of its corporate strategy to develop into a leading ESG asset manager, "as we expected the consideration of ESG criteria to become a license to operate for the entire asset management industry."

DWS also insisted it has "always been clear" in its reporting. Addressing the issues raised by the former employee, it said the firm differentiated between ESG-integrated AUM and ESG AUM, or what DWS referred to as "ESG dedicated" in its 2020 annual report, and reported both figures.

Strategies were labeled "ESG integrated" if they were actively managed and included coverage of ESG data on more than 90% of the portfolio. ESG-integrated AUM was not counted toward the dedicated ESG AUM figure. Absolute numbers were "transparently listed" in the report, the firm said.

DWS' recent half-year report published in July reported €70.1 billion of dedicated ESG assets under management, after the firm revised its ESG product classifications to meet European Union sustainable finance disclosure rules that took effect in March. It also reported €16.4 billion of illiquid green-labeled single assets in non-ESG-classified products.

"DWS will continue its path towards becoming a leading ESG asset manager," the statement said.

Paulina Pielichata contributed to this story.