Deutsche Bank AG’s asset management arm, DWS Group , tells investors that environmental, social and governance concerns are at the heart of everything it does, and that its ESG standards are above the industry average.
But behind closed doors, it has struggled to define and implement an ESG strategy, at times painting a rosier-than-reality picture to investors, according to its former sustainability chief and internal emails and presentations seen by The Wall Street Journal.
DWS’s experience underscores the difficulties and pressure money managers are facing to plant their flag in the hottest corner of the fund market, where investors are putting $3 billion a day, according to Morningstar data.
Frankfurt-based DWS said in its 2020 annual report released in March that more than half of its assets under management—€459 billion, equivalent to $540 billion—have run through a process it calls ESG integration. In such a process, companies are graded on ESG criteria, which helps inform fund managers if the investment faces any risks related to these standards.
According to an internal assessment of the company’s ESG capabilities a month earlier, “only a small fraction of the investment platform applies ESG integration,” adding there is no quantifiable or verifiable ESG-integration for key asset classes at DWS.