It can hurt to be measured by your own standards. Especially when you set standards as high as Asoka Wöhrmann likes to. He heads the asset manager DWS, a subsidiary of Deutsche Bank, number one German fund companies, always a little more premium than the competition in terms of self-image. And preferably a little further, for example in terms of sustainable development, which is currently driving the financial management industry like no other. Wöhrmann said in his address to the 2019 Annual General Meeting that “sustainability will be at the heart of DWS actions”. Since then he has repeated this statement as a mantra;
In the financial sector, the abbreviation ESG has become commonplace for sustainability, as an abbreviation for environmental standards, social aspects and rules of good corporate governance. Driven by a mixture of increased demand, pressure from regulatory authorities and better data, fund managers no longer want to judge companies on the basis of financial metrics, but increasingly on their quality for people and the environment. . DWS is better than the competition, said Wöhrmann at the annual general meeting in November 2020: they have “an approach to integrating aspects of sustainability which is unique in our industry,” he said. “It goes way beyond previous industry standards.”
Doubts about large numbers
Internal experts apparently saw it very differently. Internal emails and presentations in the months following the general meeting of shareholders cast doubt on whether DWS is as far as Wöhrmann claims when it comes to sustainability. In an inventory of the ESG product manager in February 2021: “Only a small part of the investment platform uses ESG integration. For large asset classes, ESG integration is not at all measurable. In other words: Internal experts sometimes apparently did not know what portion of the assets under management had actually gone through the supposedly unique ESG integration process. Nevertheless, the DWS writes in its current annual report that a good 459 billion euros would be managed in portfolios “with an ESG integration approach”. In other words, well over half of the 793 billion euros under management at the end of 2020.
The Wall Street Journal first reported on this gap between claim and reality on Sunday night, referring to former DWS sustainability boss Desiree Fixler, who was fired in March after just six months. A few weeks earlier, she had shown in a presentation just how much the DWS needs to catch up on what is perhaps the most important topic in the industry. The approach is “fragmented” depending on the product and the region, there is “no clear ambition or strategy”, there is a lack of regulation, including how to deal with coal investments, according to the government. February 16 document that it has received the approval of at least one member of the board of directors.
The head of Sustainability Products said in a collective email on February 1: “As we are already quite late, we must now define our ambitions and start the transformation process.” Responding to SZ’s request, Fixler said on Monday that she had “teamed up with all the senior ESG specialists from three departments, and we all agreed on the issues and the tasks ahead.”
The DWS is representative of an industry problem
Didn’t you go way above industry standards a long time ago? Wöhrmann’s assertion at the November shareholders’ meeting can hardly be refuted: there were hardly any strict industry standards on the subject until recently; EU fund managers have only been required to disclose their sustainability approach since this spring. The processes for measuring a company’s carbon footprint or how it treats employees and then taking them into account when making investment decisions have so far been determined by everyone. DWS also refers to this on request.
The corresponding data on the carbon footprint of companies, for example, is better than before, but remains poor overall. The internal controversy of DWS is likely to unfold in other houses as well, it is representative of an acute problem in the fund industry: It is easy to forget that ESG criteria cannot yet be mapped and taken. into account in all respects, as new funds with sustainability labels are constantly launched on the market.
The DWS said in a written statement that it had always been honest and denied that it overstated its own performance in terms of sustainability. “We have always made it clear to the market, our customers and stakeholders that the road to a sustainable future is long and arduous,” the company said without answering any specific questions. The annual report – and therefore the ESG integration figures published there – had been carefully checked before its publication. After his release at the end of the six-month probationary period, former sustainability boss Fixler lodged a complaint; their allegations had been investigated by an independent audit firm. As a result, “none of their claims are true, including greenwashing.”