The Frankfurt offices of Deutsche Bank and its asset management subsidiary DWS have been raided by local police following allegations of greenwashing.
German prosecutors said they were following up on a whistleblower’s allegations that DWS falsely sold investments as “greener” or “more sustainable” than they were, a practice known as “greenwashing”.
They further stated that “sufficient factual evidence has emerged” that environmental, social and governance (ESG) factors were taken into account in a minority of investments, but were not taken into account at all in a large number of investments, contrary to statements in DWS fund sales prospectuses.
In a public statement, DWS acknowledged the incident and stated that the firm would cooperate with the investigation.
“We understand a variety of actions are required to ensure a thorough and complete investigative process,” DWS said.
Regulators and policymakers have pledged to clamp down on companies making exaggerated claims about the sustainability credentials of their products as they try to cash in on booming demand for ESG investing.
There were about 50 people involved in Tuesday’s raid on DWS, including officials from BaFin and federal police, prosecutors said. The bar for successfully prosecuting corporate wrongdoing is high in Germany, although prosecutors regularly open inquiries.