Tightening of U.S. sustainable finance rules could spell further trouble for German asset manager

A plan by the U.S. securities markets control authority SEC to tighten the rules for labelling financial products as sustainable could bring further trouble to German asset management company DWS, a subsidiary of Deutsche Bank, newspaper WirtschaftsWoche reports. The SEC plans to add mandatory disclosure of how financial companies define their own ESG [environmental, social, governance] sustainability criteria, which must govern the management of at least 80 percent of all funds that are labelled as sustainable. Already in 2021, the authority charged a task force with closely monitoring and enforcing compliance with climate targets and other ESG criteria in asset management.

In its first year, the task force issued complaints against several companies, among them BNY Mellon Investment Management, that ended in fines of up to 1.5 million dollars. “Not much compared to what the SEC usually charges but still a signal that the topic is being treated seriously,” WirtschaftsWoche writes. Also, DWS is currently being investigated by the U.S. authority – and the latest developments regarding the Deutsche Bank subsidiary’s management in Germany indicate that irregular activities could have also been carried out by the company’s U.S. branch. “Whether Deutsche (Bank) gets away as cheaply as BNY Mellon is a different question,” the article says.

A raid by German control authorities in Frankfurt am Main following greenwashing accusations against DWS led to the resignation of its CEO earlier this week.