DWS has rejected claims it misrepresented its sustainability credentials as US federal prosecutors, the Securities and Exchange Commission (SEC) and German regulator BaFin launch investigations.
In a statement, Deutsche Bank's asset management arm, has hit back at the allegations after it's share price fell 13.7% as the news broke globally yesterday (26 August).
DWS clarified that while it does not comment on questions relating to litigation or regulatory matters, it "wants to address unfounded allegations being reported in the media on its ESG 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," DW spokesperson
As reported, the firm's former group sustainability officer Desiree Fixler's acted as a whistle-blower claiming the DWS was exaggerating ESG credentials across its £1trn assets, which has led to a series of probes by the SEC and federal prosecutors in the US and German regulator BaFin.
A DWS spokesperson said: "DWS 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."
The firm argued it holds a "long tradition of sustainable and responsible investing" and has recently defined ESG as a "cornerstone" of its corporate strategy in anticipation of ESG criteria becoming a requirement for a license to operate within the asset management industry.
"DWS strives to always be transparent to the market, our clients and stakeholders in our message that the road to a sustainable future is long and hurdled; for the entire industry and also for DWS."
It went on to clarify the difference between "ESG integrated AuM" and "ESG dedicated AuM", which formed part of company's former group sustainability officer Desiree Fixler's complaint.
According to the DWS statement, strategies were "ESG integrated" if they were actively managed and included coverage of ESG data on more than 90% of the portfolio. These figures did not count towards the firm's "ESG Dedicated AuM".
Fixler, pictured above, whose dismissal after less than a year in post is being investigated by an employment tribunal in Germany, claimed, as reported yesterday, that DWS had misled investors by stating more than half of its assets under management was subject to an ESG integration process.
She claimed an internal assessment she oversaw found the ESG risk management system was highly flawed and portfolio managers were not required to take it into account when making investment decisions.
To date, US federal prosecutors, the SEC and BaFin have each launched investigations into the allegations DWS has overstated its ESG credentials.