DWS fined $19m by SEC over 'materially misleading' ESG statements

investmentweek.co.uk:

DWS has been embroiled in a greenwashing scandal since 2021, when its former group sustainability officer Desiree Fixler alleged the firm was misrepresenting its ESG credentials.

The US financial watchdog said today (25 September) that DWS Investment Management Americas would pay $19m for «materially misleading statements» about its controls for incorporating ESG factors into research and investment recommendations. 

The firm will also pay $6bn for failing to develop an anti-money laundering (AML) programme for its US mutual fund business tailored to their specific risks, as required by law.

Regarding the ESG enforcement action, the SEC said that despite marketing itself as an ESG leader, from August 2018 until late 2021 DWS failed to implement certain provisions of its global ESG integration policy «as it had led clients and investors to believe it would». 

DWS and Deutsche Bank raided by police following whistleblower claims of greenwashing

The asset manager also failed to adopt and implement policies and procedures «reasonably designed» to ensure that its public statements about the ESG integrated products were accurate, the regulator added.

«Investment advisers must ensure that their actions conform to their words,» said Sanjay Wadhwa, deputy director of the SEC's division of enforcement and head of its climate and ESG task force. 

«Here, DWS advertised that ESG was in its DNA, but, as the SEC's order finds, its investment professionals failed to follow the ESG investment processes that it marketed.»

DWS has been embroiled in a greenwashing scandal since 2021, when its former group sustainability officer Desiree Fixler alleged the firm was misrepresenting its ESG credentials. 

The claims led US federal prosecutors,