Don’t Throw Out the Baby with the Greenwashing
Regulators are investigating DWS’s ESG practices. While the risks of misrepresentation are real, they shouldn’t hobble efforts to allocate capital with virtue in mind.
When is it too much?
Photographer: Scott Olson/Getty Images North AmericaNews that regulators are investigating DWS Group GmbH for allegedly greenwashing some of its funds highlights an uncomfortable truth about environmental, social and governance labeling: It’s impossible to agree what qualifies as an acceptable investment. But the more effort that’s made, the better the outcomes will be, even if they fall short of perfection.
The Securities and Exchange Commission is probing whether DWS, a Frankfurt-based asset manager that’s 80% owned by Deutsche Bank AG, overstated its application of ESG criteria to some investment products, according to the Wall Street Journal. The German financial regulator BaFin is also scrutinizing the firm, Bloomberg News reported Thursday. The investigations come after the Journal said earlier this month that Desiree Fixler, who was fired as the firm’s chief sustainability officer in March, filed an unfair dismissal case alleging she was dismissed for objecting to ESG claims made in the company’s annual report.