German federal police raided Deutsche Bank AG and its asset management arm, DWS Group, in Frankfurt, Germany. DWS has faced accusations of greenwashing ever since the firm's former head of sustainability said it overstated how much capital was allocated to sustainable investing last August.
Bloomberg reports the Tuesday morning raid on Germany's largest lender and DWS is directly related to greenwashing, though precisely what federal police are investigating and who the probe is focused around is unknown.
DWS' former chief sustainability officer, Desiree Fixler, went public last year about how the firm exaggerated its use of sustainable investing criteria to manage its assets. DWS has since denied the claims, and the U.S. Securities and Exchange Commission (SEC) and German financial regulator, BaFin, have been investigating the asset management arm.
*U.S. PROBING DEUTSCHE BANK'S DWS OVER SUSTAINABILITY CLAIMS: DJ— zerohedge (@zerohedge) August 25, 2021
DWS shares fell as much as 4.6% on the news. Deutsche Bank owns an 80% stake, and its shares slumped a little more than 2%.
Fixler has said DWS misrepresented its ESG investing in its 2020 annual report, in which it claimed to have over half of its $900bln assets invested in ESG.
The Frankfurt public prosecutors' office said the investigation had been "triggered by reports in the international and national media that the asset manager DWS, when marketing so-called 'green financial products' had sold these financial products as 'greener' or 'more sustainable' than they actually were."
"After examination, sufficient factual evidence has emerged that, contrary to the statements made in the sales prospectuses of DWS funds, ESG factors . . . were not taken into account at all in a large number of investments," the prosecutors' office said, calling this "prospectus fraud".
Since Fixler left the firm and publicly voiced concern about DWS' ESG investing, DWS changed its ESG criteria and said it only had $123 billion "ESG assets" for 2021, a 75% decline from a year earlier when it said half of its assets were "ESG integrated."
The latest raid comes one month after the Deutsche Bank was raided in Frankfurt over suspected money laundering -- certainly not a good look for the bank.