Although discussions about environmental and social governance, or ESG, and sustainable investing may have encountered a lull during recent weeks, investors and asset owners worldwide still consider this topic as hugely significant in their discussions with asset managers, according to one of Europe’s top chief investment officers.
Björn Jesch, CIO at DWS Asset Management, the second-biggest European asset manager with some 860 billion euro under management, told journalists at the presentation of the firm’s 2024 outlook that sustainability and ESG clearly have the attention of the firm’s clients in Asia, in the United States and in Europe.
“We haven’t heard too much about ESG in the last weeks or so, in general. I think, and this is my experience travelling around the globe, speaking to Asian clients, speaking to US clients, speaking to European clients, it’s still ‘the topic’,” Jesch said, answering a question from Investment Officer.
“Every part of what we just mentioned ESG is an important topic,” he said, referring to various DWS outlooks on equity, fixed income and private markets. “So not mentioning it doesn’t mean that we are not looking or filtering it in, in our investment processes. It’s true for every and each of the asset classes.”
Part of all DWS asset classes
“There’s no question about it,” Jesch said. “It’s probably moving away from exclusion things and moving more to engagement topics - I think engagement is really very important. So to answer your question; it’s very, very important for us at DWS. And it’s part of every investment-decision taking process of our respective asset classes.”
Asked how he expects the focus on sustainability and ESG will evolve further during the coming years, he said that he expects these discussions will “definitely” evolve further. “The pressure will increase - that’s for sure - from a regulatory perspective, from an investor’s perspective.”
Sustainable investing is regarded as a sensitive topic for DWS Asset Management. The firm, closely related to Deutsche Bank, was the subject of police raids in 2022 and has found itself in hot water with financial supervisors, including Germany’s Bafin and the US Securities and Exchange Commission over sustainability claims that it could not substantiate.
In September, the SEC imposed a 19 million dollar fine on DWS after it found a mismatch between the ESG practices promised and what it delivered between August 2018 to late 2021. DWS at the time acknowledged that it has “learned many lessons from the ever-evolving regulatory environment”.