In what is a reminder that potential liabilities based on alleged ESG-related overstatements remains a significant corporate risk, DWS, the asset management arm of Deutsche Bank has agreed to pay a €25 million fine to settle greenwashing allegations related to its ESG-focused investment products. The fine, imposed by the Frankfurt Public Prosecutor’s Office, follows an earlier $19 million SEC fine the firm agreed in 2023 to pay based on similar charges. The firm’s April 2, 2025, statement about the Frankfurt Public Prosecutor’s Office fine can be found here.

Background

DWS is an asset management firm that is majority owned by Deutsche Bank but that also maintains its own stock listing. The underlying allegations go back to August 2021, when Desiree Fixler, DWS’s former sustainability chief, came forward as a whistleblower asserting that the firm painted “a rosier-than-reality picture” to investors about its ESG efforts and products. An August 1, 2021 Wall Street Journal article about the whistleblower’s claims can be found here.

The Prior SEC Proceeding

The whistleblower’s allegations resulted in an SEC investigation and enforcement action against DWS units, which ultimately settled, as reflected in the SEC’s September 25, 2023 press release, here. (The firm also separately settled unrelated charges related to alleged anti-money laundering allegations at the same time.)

The agency had alleged that the firm “made materially misleading statements about its controls for incorporating ESG factors into research and investment recommendations for ESG integrated products, including certain actively managed mutual funds and separately managed accounts.” The agency also alleged that the firm “failed to adequately implement certain provisions of its global ESG integration policy as it had led clients and investors to believe it would” and “failed to adopt and implement policies and procedures reasonably designed to ensure that its public statements about the ESG integrated products were accurate.” The firm agreed to pay a $19 million fine for the ESG-related allegations. The SEC’s September 25, 2023, cease-and-desist order entered against the DWS units can be found here.

The Subsequent German Proceedings

German prosecutors also separately investigation the greenwashing allegations against the company. In May 2022, German police raided DWS’s Frankfurt offices, as reported here. German prosecutors later charged that the firm had made misleading statements about its ESG credentials and products.

According to news reports (here), the prosecutors alleged that from 2020 to 2023 DWS had “extensively” advertised financial products that claimed to have ESG characteristics. The prosecutors reportedly alleged that “statements in external communications, such as claiming to be a ‘leader’ in the ESG area or stating ‘ESG is an integral part of our DNA’ did not correspond to reality.”

In its April 2, 2025, statement about its resolution of the Frankfurt Prosecutors Office’s charges, DWS said that the prosecutor had “identified a negative infringement” and “issued a fine to DWS in relation to its past regarding certain ESG-related documentation and control processes.” In its statement, DWS acknowledged that “in the past our marketing was sometimes exuberant,” while also stating that “we have already improved our internal documentation and control processes.”

Media reports (for example, here) quote statements from the environmental group Greenpeace as saying that the fine DWS agreed to pay “was the highest ever penalty imposed in Europe’s biggest economy for such an offense.”

Discussion

Though the German fine was just assessed this past week, in many ways the German proceedings feel like a throwback to an earlier time. The allegations against DWS are a reminder that just a short time ago, firms felt compelled to try to demonstrate their green credentials. The prosecution against DWS is a reminder that some firms, as part of ESG-related virtue signaling, managed to get ahead of the reality of their actual ESG practices and products.

How quickly things can change, though. More recently, many companies (particularly in the U.S.) have experienced an anti-ESG backlash, in which activists and red-state politicians have targeted firms they feel have advanced ESG goals to the detriment of investors’ interests. From a time just a short while ago when companies felt such compulsion to establish their green credentials that some companies engaged in greenwashing, many companies have now found it expedient to forebear from making ESG-related statements, a process that has been called “greenhushing.”

These events show how the entire topic of ESG has changed in many ways over a very short period of time. The sequence of events involving DWS unquestionably contains many lessons about the perils for companies of overstating green credentials. But in the significantly different political and social environment that now prevails, many firms are now likelier to conclude that perhaps they are better off not talking about ESG issues at all. In the U.S., this observation is true not only with respect to environmental and climate change-related issues, but also with respect to DEI-related issues, as well.

Since the time that the charges against DWS first surfaced, the potential liability risk associated with ESG have been completely transformed. While there is no doubt that even now companies that overstate their sustainability credentials could be subject to greenwashing claims, the likelier ESG-related claim these days (especially in the U.S.) is anti-ESG backlash type claim, of the type I have written about in numerous prior posts on this site (most recently, for example, here and here). These days, the likeliest ESG-related lawsuit plaintiff is an anti-ESG activist or a red state attorney general.