All the green penalties of Deutsche Bank
In Germany, policemen and inspectors broke into the headquarters of DWS, an asset management company linked to Deutsche Bank, after allegations of falsification of "green" investment credentials. Here are facts and comments
Yesterday, inspectors from BaFin, the German financial regulator, broke into the offices of Deutsche Bank and its subsidiary DWS (an asset management company), accused of misleading their clients about the "sustainability" of certain investment products. The raid on DWS involved about fifty people in all, including BaFin officials and federal police officers.
DWS GUILTY OF GREENWASHING ?
In essence, the German authorities want to investigate the allegations made by the press and by a whisteblower (ie an individual inside the organization who denounces the illegal activities committed) to DWS, who allegedly presented some investment opportunities as "more sustainable" and "more green "(ie with a positive environmental impact) than they actually were: it is a practice known as greenwashing .
As Reuters reports, the German inspectors said that "sufficient factual evidence has emerged" that would show that environmental, social and governance factors (ESG: are the criteria that determine the "sustainability" of an investment) have only been taken into consideration. in a small part of investments, and which have not been taken into consideration “at all in a large number of investments”, contrary to what DWS declared.
THE INVESTIGATIONS OF BAFIN AND SEC
Last year, BaFin and its US counterpart, the SEC, opened separate investigations into the DWS allegations by its former sustainability executive, Desiree Fixler. According to whisteblower , the group exaggerated the attention given to sustainability criteria in the management of investments.
BNY MELLON PAYS
Regulators have made a commitment to thwart companies that exaggerate the sustainability credentials of their products, trying to take advantage of the great interest in ESG investments. Until now, however, the practical implementation of this promise has been poor. But last week the SEC announced that investment management firm BNY Mellon paid $ 1.5 million to close the ESG bias case in some managed funds.
WHAT THE US, EU AND UK DO
The SEC also proposed some regulatory changes to counter unsubstantiated claims about ESG funds. In the European Union, the market supervisor is working on a legal definition of greenwashing to increase the effectiveness of enforcement . In the UK, the advertising regulator is investigating bank HSBC on some announcements promoting "green" initiatives.
THE ANALYSIS OF D'ANGERIO
In the Sole 24 Ore Vitaliano D'Angerio, journalist expert in sustainable finance, writes that the investigations in Germany and the United States on DWS will become "a watershed, especially for the European supervisory authorities": the European Union has in fact a more advanced than the American one, but does not have the same enforcement capabilities.
“That the time had come to put a stop to green marketing”, writes D'Angerio, “was a common opinion in the world of green finance. On the other hand, the numbers speak for themselves: sustainable investments all over the world amount to 35 trillion dollars (source Gsia) with the United States and Europe in the first two places in this special ranking ".
Consequently, greenwashing is also a very widespread phenomenon. According to a survey last year by the British think tank InfluenceMap, of 753 equity funds surveyed, 71 percent did not meet climate targets.
However, the journalist explains how the European Union has developed a disclosure on the transparency of sustainable finance (the SFDR) even before clearly classifying polluting and non-polluting companies. "This does not mean", he concludes, "that it is forbidden to paint financial instruments green even if the confusion of 'labels' continues for now".
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/economia/deutsche-bank-dws-greenwashing/ on Wed, 01 Jun 2022 08:20:06 +0000.