The U.S. Securities and Exchange Commission (SEC) is investigating DWS. The stock market watchdog is investigating an accusation that the German asset manager falsely made certain sustainability claims.
This accusation comes from Desiree Fixler (pictured), the former Group Sustainability Officer of DWS. She was appointed by DWS last summer, but she had been employed for less than a year. In an interview, she argued that DWS improperly used certain sustainable investment criteria in its communications.
Fixler came from U.S. alternative investment specialist ZAIS, where she was a portfolio manager and managing director for impact investing. Previously, she also held executive positions at JP Morgan, Deutsche Bank and Merrill Lynch.
DWS published Thursday a press release and stands by its annual report disclosures. “We firmly reject the allegations being made by a former employee. DWS will continue to remain a steadfast proponent of ESG investing as part of its fiduciary role on behalf of its clients.”
Dismissal challenged
In DWS’s 2020 annual report, published in March, the asset manager would have claimed that half of its 459 billion euro client assets are managed based on environmental, social, governance (ESG) criteria. This would be grossly exaggerated and, according to the Wall Street Journal, they already knew about it. For example, according to the newspaper, it was determined internally as early as February that only “a small portion” of its investment platform applied a process that could be called ESG integration.
Fixler was fired from DWS in March this year and has launched a lawsuit against her dismissal in Germany. According to her, her dismissal is related to the fact that she reported ESG abuses to her superiors, but an investigation by an independent firm found no basis for those accusations, DWS told the Wall Street Journal.
DWS: “We have always been clear in our reporting. At DWS, we differentiated between “ESG Integrated AuM” and “ESG AuM” (which DWS referred to as “ESG Dedicated”) when presenting the assets under management in our Annual Report 2020 and reported both classifications.”
Growing exasperation over “greenwashing”
The investigation into DWS and possibly falsely claimed ESG standards comes at a time when there is growing exasperation about “greenwashing” worldwide. For example, under the European directive SFDR, European asset managers must now make it clear to clients which label their investment products have: gray, light green or dark green, corresponding to articles 6,8 or 9 of that directive.
Many European parties label their own products under Article 9. That is not only debatable, but also risky, because it is not until 2022 that European legislators will clarify in detail exactly what criteria will then justify an Article 8 or 9 labeling. American parties claim that label much less, according to research by Altis Investment Management. But Gerald Cartigny, who heads Goldman Sachs Asset Management in the Benelux, claims also that this is because the criteria have not yet been crystallized and they fear legal consequences (read: claims) if the labeling is incorrect.
‘ESG investing is a big social placebo’
Last week, a flaming protest by Tariq Fancy appeared on social media about how asset managers are falsely claiming ESG integration for their funds and/or investment policies. Fancy bases his views on his time as chief sustainability officer at BlackRock. According to him, the world’s largest asset manager would falsely claim to be serious about ESG standards.
“ESG investing is a big social placebo that reduces the likelihood of making the real reforms the world needs,” Fancy writes in his manifesto.
Desiree Fixler started in her new position in August 2020. Her job was to ensure that the ESG strategy would be consistent across all regions “in line with responsibilities as a manager and as a company. Key responsibilities include orchestrating all of DWS’s sustainability activities globally across the value chain, as well as connecting all groups working on sustainable issues,” DWS wrote in a note at the time.
In that regard, Asoka Woehrmann, CEO of DWS, stated at the time, “The appointment of our GSO is an important milestone in establishing a holistic ESG approach for DWS.”
In the same press release, Desiree Fixler was quoted as saying, “I am delighted to join DWS as the new Group Sustainability Officer, a company with more than 20 years of experience in sustainable investing. I am eager to share and apply my knowledge and experience in responsible investing, which I have built up since 2005. As GSO, I can also pursue a common goal with DWS: To embed ESG integration and impact investing into the asset management value chain.”
The SEC’s investigation Thursday pulled Deutsche Bank shares down 2 percent, while Frankfurt-based DWS Group shares slumped as much as 13,66 percent. Deutsche Bank took DWS public in 2018, although it still holds an 80 percent stake in the asset manager.