DWS said ESG was in its DNA — the SEC found its own policy wasn't followed

From August 2018, DWS Investment Management Americas told investors ESG was in its "DNA": it claimed a specific global ESG-integration policy governed how its investment teams weighed environmental and social factors, and a 2020 annual report said roughly half of its assets ran through ESG screening. The claims helped DWS raise money in a market where sustainable-labeled funds were commanding a premium.

The SEC's investigation, opened after DWS's own former sustainability chief Desiree Fixler went public in 2021 saying the ESG process was overstated, found that DWS's investment professionals had not actually implemented large parts of the policy it was marketing between August 2018 and late 2021. In a separate, unrelated action, DWS was also found to have failed to build an anti-money-laundering program tailored to the specific risks of the mutual funds it advised, as the Bank Secrecy Act required.

On 25 September 2023 the SEC settled both matters at once: a $19 million penalty for the ESG misstatements and a $6 million penalty for the AML failures, $25 million total, with DWS neither admitting nor denying the findings in either order.