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“DWS stands by its annual report disclosures,” the firm said in a statement late on Thursday. “We firmly reject the allegations being made by a former employee. DWS will continue to remain a steadfast proponent of ESG investing.”
Earlier on Thursday, DWS had plunged as much as 14.2% after revelations that Germany’s financial markets regulator BaFin and U.S. prosecutors were probing claims by former sustainability executive Desiree Fixler that DWS had overstated the amount of assets adhering to social and environmental criteria. The stock decline was the steepest since the onset of the covid pandemic whipsawed markets in March last year.
At the end of 2020, DWS stuck an ESG label on 459 billion euros ($540 billion) of assets, or roughly half its total portfolio. But by the end of June, only about 70 billion euros of DWS’s assets under management qualified as ESG under the Sustainable Finance Disclosure Regulation, rolled out in March by the European Union as the region tries to impose the world’s most ambitious anti-greenwash regulation.
DWS fluctuated between limited gains and losses during early trading in Frankfurt on Friday.
The probe adds to existing legal headaches for Deutsche Bank Chief Executive Officer Christian Sewing as he seeks to take advantage of the fast-growing trend for investments that aim to further environmental or social goals. The lender has also been criticized by the U.S. Federal Reserve for failings in its controls, while BaFin has boosted its money-laundering monitor at the bank. There’s also an internal investigation into whether it mis-sold foreign-exchange derivatives.
