Deutsche Bank unit DWS faces new greenwashing accusations over fossil fuel investments
Clean Energy Wire / Der Spiegel
German asset management company DWS, a subsidiary of Deutsche Bank, is facing fresh allegations of greenwashing within its sustainable investment branches. Finance NGO Finanzwende found that DWS invested about 850 million dollars from its “green” funds into fossil fuel companies in 2022, making it a “top tier” fossil fuel investor, while at the same time advertising its funds as a gateway to environmental protection that simultaneously allowed investors to profit financially. By the end of 2022, DWS’s green fund portfolio included fossil fuel company shares worth some five billion dollars, which earns the company the top rank among all fossil investments in green funds, the NGO said. Given that companies like Shell, Total or Enbridge continue to expand their fossil fuel activities, these investments cannot even be considered transition investments, it added. With just under 200 million dollars, DWS investments in renewable power companies were 20 times lower than those in fossil fuel producers, whose profits ballooned during the energy crisis, Finanzwende said.
A raid by German control authorities in mid-2022 following a whistle-blower's leak about greenwashing practices rattled the company’s management and led to the resignation of then CEO Asoka Wöhrmann. Investigations by financial supervision authority BaFin about the investment company’s business practices is ongoing. However, DWS’s new CEO Stefan Hoops quickly declared that the most urgent task was to “re-establish trust in DWS as a platform.” According to NGO Finanzwende, the company has done nothing to earn this trust over the past year. Especially as DWS was the biggest green fund buyer of fossil fuel company shares in 2022 – and increased the share in its portfolio from 3.2 percent in 2021 to 5.7 percent a year later, according to the NGO.
DWS argued it could not “immediately exit” its investments in fossil fuel companies, as this would mean a loss of influence, news magazine Der Spiegel reported. The company had therefore “consciously opted against” completely excluding fossil fuel companies from its funds. The DWS greenwashing scandal has also come under investigation by U.S. financial authority SEC, which has vowed to tighten its criteria for labelling funds with so-called ESG (environmental, social, governance) sustainability criteria. While the DWS scandal has caused a stir in the financial industry and made investors wary about greenwashing risks in the ESG market, overall investments are booming. Financial industry association Forum Nachhaltige Geldanlagen (FNG) found that sustainable financial products grew by over 50 percent in Germany in 2021, with the total volume reaching just over half a trillion euros by the end of that year.