Deutsche Bank’s asset management arm, DWS Group, has been hit with a historically high €25m ($27m) fine by the Frankfurt Public Prosecutor’s office after being accused of extensive greenwashing. The penalty marks the culmination of a multi-year joint investigation with the Federal Criminal Police Office in Wiesbaden.
The prosecutor’s office stated that DWS and its investment arm, DWS Investment, had “extensively” advertized financial products claiming ESG characteristics between 2020 and 2023. The investigation revealed that “statements in external communications, such as claiming to be a ‘leader’ in the ESG area or stating ‘ESG is an integral part of our DNA’ did not correspond to reality.”
While acknowledging an ongoing “transformation process” within the firm, the prosecutor’s office emphasized that “statements in external relations must not go beyond what can actually be implemented.”
This significant fine is reported to be one of the highest, if not the highest, ever issued in Germany for a greenwashing offense. Legal experts suggest the penalty serves as a crucial “wake-up call” as new EU regulations, including the Green Claims Directive and the Empowering Consumers Directive, are being implemented. Theses regulations aim to ensure transparency and correctness in company communications to prevent consumer and investor misinformation.
ESG investing
The prosecutor’s office highlighted the importance of accurate information in the rapidly growing ESG asset class, noting that “incorrect information about these products or the participants in the distribution chain may be seen as misleading.” The case also underscores growing concerns about the challenges of policing the surge in ESG investing, particularly regarding the lack of standardized data and criteria to verify the sustainability claims of investments and firms managing them. Critics have long worried about this potential lack of standardization.
“This latest fine shows that regulators, especially in Europe, are still very keen on rooting out greenwashing.”
Harriet O’Brien, ESG consultant at Danesmead Advisory
DWS acknowledged the fine, stating, “[this fine] is in relation to deficits in the past regarding certain ESG-related documentation and control processes, procedures and marketing statements.” The company has agreed to pay the penalty, which it said would not affect its first-quarter 2025 results due to prior provisions.
The landmark enforcement action follows a $25m fine levied by the US SEC against DWS in 2023 for similar misleading statements about ESG integration practices. Both investigations were reportedly triggered by former DWS Group Sustainability Officer Desiree Fixler, who went public in 2021 with allegations of overstated ESG credentials. She claimed she was fired for raising internal concerns.
Wirecard
Emma Parry, Founder & CEO, NovaFin Consulting Ltd, told GRIP: “The DWS case is notable not just for Fixler’s role in blowing the whistle to highlight the chasm between their public ESG claims and the reality of their ESG efforts, but also, ironically, its ESG system was incorrectly calibrated. In fact, in June 2020 it still gave Wirecard – which by then was on the brink of collapse in Germany’s greatest financial scandal – the second highest ESG rating because of strong corporate governance!”
The Frankfurt Public Prosecutor’s office emphasized that the fine was calculated based on the total revenue generated by DWS’ parent company, Deutsche Bank. This action signals a clear intent from German authorities to hold financial institutions accountable for their ESG claims.
“This latest fine shows that regulators, especially in Europe, are still very keen on rooting out greenwashing,” said Harriet O’Brien, ESG consultant at Danesmead Advisory.
The case is expected to prompt companies to thoroughly review their product and marketing information related to sustainability, as they may face increased scrutiny from consumer protection organizations, NGOs, prosecutors and regulators. This historically high fine underscores the growing focus on combating greenwashing and ensuring the integrity of the sustainable finance market.
Role of whistleblower
Georgina Halford-Hall, CEO, WhistleblowersUK, told GRIP: “We are living in the age of the whistleblower. However, the DWS case highlights risks to the personal safety and security of whose who speak up. Fixler is a good example of the chasm between policy and reality.
“In the UK we have witnessed a seismic pivot toward rewarding whistleblowers and it’s difficult to find a parliamentarian who does not support the Office of the Whistleblower Bill. But while feet are dragging we await the next scandal and the headlines asking ‘why didn’t someone blow the whistle’? It’s a no brainer, acknowledging the risks but without meaningful and day one protection, rewards – however large – will rarely be enough of an incentive.”