Revelations this week of a police raid at DWS and its majority owner Deutsche Bank over greenwashing claims is probably just the tip of the iceberg within the asset management industry.
This is just my personal opinion, but as I stated within the November issue of PropertyEU “Have we got a clue?” I drew attention not to deliberately or fraudulently inflating claims of ESG credentials, but to the way I know some asset managers and advisors are ‘blagging’ knowledge on ESG matters.
I believe that goes for a large number of investment managers, and often comes to light when a firm is looking to raise equity for a fund. They provisionally meet advisors who might be able to assist in marketing, and during that soft hurdle it becomes quite obvious that only a fraction of managers would be at a requisite level of knowledge and skills to adequately answer increasingly in-depth questions from potential investors over ESG aspects of the strategy.
Tuesday’s events are as serious as one can get. First reported by Bloomberg, German police – around 50 of them – gained access to Deutsche Bank and DWS’ iconic towers in the financial district of Frankfurt in the middle of the morning. Federal police were accompanied by public prosecutors from Frankfurt, and officials from the regulator, BaFin.
There has already been serious fall-out. DWS’ CEO Asoka Woehrmann has resigned.
To be clear, at this stage there is an investigation, so there is no suggestion here that DWS or Deutsche Bank has done anything wrong. DWS said in a statement it had continuously co-operated fully with all relevant regulators and authorities and will continue to do so.
Frankfurt police prosecutors’ office said the investigation had been spurred by reports in the international and national media that DWS had sold ‘green financial products’ as ‘greener’ or ‘more sustainable’ than they really 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.’ This might amount to prospectus fraud.
As multiple reports have said, the focus on DWS and Deutsche Bank has been there for months and can be traced back to when DWS’ chief sustainability officer, Desiree Fixler, left the company in March 2021. She had said the company was inflating its green credentials and claimed she was fired for speaking out. Incidentally, she has since lost a claim against her former employer for unfair dismissal.
There is no suggestion here that the real estate team within DWS has done anything wrong, but in an interview with PropertyEU it became clear that companies have different approaches. In June 2021, Jessica Hardman, head of European real estate portfolio management, was keen to speak about ESG with this magazine.
She noted how companies had been hiring ESG professionals and building out their ESG teams to meet investor demands and to improve the whole effort in this field.
She said DWS had chosen not to go down the route of building just a specialist team. Instead, the company had taken a decision to train up its 140 European real estate staff in ESG matters. ‘With training, we are relying on everyone to pull their weight, and it takes continuous training and an integrated approach. It is better to have an army of 140 than a team of five,’ she said.
In August, DWS then appointed Aleksandra (Sasha) Njaguli, as global head of ESG for real estate based in London where she reports to Todd Henderson, head of real estate Americas, and Clemens Schaefer, head of real estate, APAC & EMEA.
She was previously global head of ESG with CBRE Investment Management.
