Law and order is coming to the Wild West that has been investment ESG. Last week, agents from the German financial supervisory authority raided DWS, Deutsche Bank’s asset management subsidiary, on suspicion of greenwashing. Other asset management companies should not rest easy, either; both regulators and enforcement bodies are cracking down on over-optimistic labels and empty promises. In this instance, authorities suspect DWS of fraud, plain and simple. They accuse DWS of describing more products as aligned with environmental, social, and governance (ESG) principles than is in fact the case, according to a whistleblower. This falls between two of the kinds of greenwashing that we described in our report: “fibbing” and “meaningless or false labels” (pretty self-explanatory, but fibbing is making false environmental claims, while meaningless or false labels is when a company markets a product or brand with false or meaningless certifications or labels that mislead consumers or investors). DWS, like so many others in the investment space, is trying to appeal to environmentally minded investors, who — depending on the country — can even outnumber investors who prioritize financial return. In this instance, ESG labeling made its way into investment product prospectuses when those products were not managed according to any ESG principles, goes the charge.
How Can The Likes Of DWS, And Other Business Leaders, Avoid Greenwashing Charges?
Our report on sustainability communications describes an accounting process that marketers must follow, which has six key perspectives. The instrumental perspectives that would help forestall this particular instance are:
To discuss our research on greenwashing in more detail, clients can read the greenwashing research or schedule an inquiry. Media can contact our public relations team to facilitate interviews: press@forrester.com.
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