On the 31st of May, 2022, fifty prosecutors and police officers raided Deutsche Bank and its investment arm DWS in Frankfurt, Germany.
Not because of large-scale money laundering, or illegal payments. No. For the first time in history, a bank was raided because of greenwashing.
Desiree Fixler is an advocate for change and impact in the practice of ESG investing and sustainability. She is today a frequent media commentator and works as a senior advisor to financial institutions and nonprofits on ESG matters.
In 2020, American Desiree Fixler was appointed Group Sustainability Officer at DWS Group, with the responsibility of driving the firm’s overall sustainability strategy. DWS is one of the world’s leading asset managers, with over 800 billion euros of assets under management, and Desiree saw it as a dream job.
”With almost a trillion dollars to put to work, just imagine the impact we could have”, she thought.
In March 2021 DWS released its annual report, in which the company claimed it was a leader in the ESG market. According to the report, more than half of the company’s assets were meeting environmental, social and governance (ESG) criteria. This meant that a staggering €459 billion supposedly qualified as sustainable investments.
The company publicly boasted that ESG was at the heart of everything, and that all the assets had been run through a highly sophisticated AI-supported tracking system that identified ESG risks.
The stock market loved the announcement. The demand for ESG investment products was growing, and now DWS was displaying this amazingly large portfolio of verified green options.
There was only one problem.
It wasn’t true.
”The reality was that we weren’t aligned, and we did not have the systems in place to produce the right type of products. Internally, folks described the system as ’shit’”, Desiree Fixler says in an hour-long interview with the Planetary Business podcast. https://www.youtube.com/watch?v=86SQARcQoWM
She began investigating how the system actually worked, and then reported her findings – and a suggested action plan – to the management team. She expected them to sound the alarm and immediately start dealing with this huge problem. But what happened was … nothing.
”This was all fixable, and in my team, we were just waiting for the management to give us a green light on the action plan”, she says in the podcast.
But the green light was never turned on. Instead, one day before the annual report with the false ESG numbers was to be published – Desiree Fixler was suddenly fired. Since she had been rated A+ in terms of individual performance, she saw the sudden termination as retaliation for speaking up.
She felt that the whole situation was handled in a bad way, and therefore put together a five-page dossier which she sent to the chairman of the board. In it, she explained all the issues she had founded, and also that she believed she had been fired in retaliation for speaking up about these problems.
But the chairman did not act on the dossier either, and after being publicly smeared by her former employer in a major business newspaper, Desiree decided to fight back. Just a few days later she got a call from the US authorities, which had opened up an investigation against DWS and was now asking Desiree Fixler to become a voluntary witness in their investigation. Later on, the federal German financial supervisory authority, BaFin, opened up an investigation as well.
Deutsche Bank Tower in Frankfurt, Germany. Photo by cmophoto.net on Unsplash
In May the following year, DWS and the headquarters of its majority owner Deutsche Bank in Frankfurt, were raided by police and prosecutors, who later said in a statement that “sufficient factual evidence had emerged” that ESG factors ”were not taken into account at all in a large number of investments.” But that was not when Desiree felt she won her greatest victory. That happened two months earlier, in March, when DWS published its annual report for 2021. In the report, the company’s ESG assets under management had shrunk from €459 to €115 billion. ”They revised down their ESG assets under management by 75 percent. They also noted that they would no longer use their smart integration ESG framework. The two main things I called for, they did”, Desiree Fixler says in the podcast interview.
DWS is still being investigated by the BaFin, the Securities and Exchange Commission (SEC), and the Department of Justice in the US, for allegedly misrepresenting its ESG work. In October last year, a German Consumer group also decided to file a lawsuit against DWS over alleged greenwashing. DWS has rejected the allegations of greenwashing, and how the story ends remains to be seen. What we do know is that since the scandal broke, the CEO, COO, CIO, and the global head of communications have all left the company.
”At the end of the day this is a story about a colossal corporate governance failure, where the CEO and the management board made the decision to take the shortcut to present themselves as a savvier and more advanced ESG asset manager than they were in reality”, concludes Desiree Fixler, who was recently appointed to the Financial Conduct Authority’s ESG advisory committee of the UK.
Stefanie Hauer is the producer of the Planetary Business podcast. She says: ”This case demonstrates that we are not yet clear on how to define 'green'. We need a system of control to challenge the word 'sustainable'.”
The producer of the podcast, German Stefanie Hauer, is a corporate sustainability leader and ranked as one of the top sustainability voices on Linkedin. She feels this is a story that needs to be heard by many.
”Greenwashing used to be a PR issue. This case made clear that company managers can be held accountable. So also from a risk management point of view, corporate sustainability must be up high on the agenda. People need to understand what has actually happened, and to acknowledge that we need much higher standards for corporate governance to make sure this won’t happen again.
Stefanie Hauer also wants to highlight the fact that even though the CEO and several other persons in leading positions have had to leave DWS, the chairman is still at the high seat of the board.
”The people sitting on the boards need to be sensitive to what the planetary crisis is all about. They need to take responsibility for this, by admitting mistakes, taking serious action, and re-inventing their business models. There is no shortcut for true corporate sustainability.”
FACT BOX: LOW LEVEL OF CLIMATE EXPERTISE ON COMPANY BOARDS
- According to a study (from 2021) by the NYU Stern Centre for Sustainable Business, only 0,2 percent of the board members in the 100 largest US companies had specific climate expertise.
- To increase the knowledge among board members and CEOs about the climate crisis, We Don’t Have Time has previously organized Climate Board Training – How to future-proof your business.
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60 w
Wisdom 👍
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61 w
Truly a very important action! Very impressed by Desiree and many thanks to @stefanie_hauer
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62 w
Bold action. Kudos Desiree.
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62 w
The biggest challenge we have is not that we tackle greenwashing by defining deep-green investments and by this compare performance of banks and AM on their green asset ratio, but that all other investments are rated as not green or neutral. Sustainability is about performance and you cannot properly evaluate performance on a binary scale. Every investment has at least two impacts: on the firm/shareholders and on society and we need complete transparency on both sides of the coin - considering both positive and negative impacts. Feel free to learn more on how this can be achieved on www.positive-impacts.com - publications.
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62 w
This is on the same trajectory as health and safety legislation at the start it was given lip service until the owners started to get the penalties With regards the environment this is now as important as health and safety as we are not just protecting the person in the now but for generations to come.
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62 w
Brave woman and smart moves!
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62 w
Thank you ALL for your hard work at holding corporations and legislators accountable!
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62 w
we need to move in a different direction ... • Reduced Human Footprint • Eco-Sustainable Education • Passive Solar Homes • Rooftop Solar • Rainwater Harvesting • Solar Cooking • Solar Hot Water • Greywater Biomass • Compost Toilets • Organic Farming facebook.com/groups/1840973649369465/
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62 w
One company jumps to my mind after this...ENRON... does DWS suffer the same fate as ENRON...we shall see...yes... kudos Desiree Fixler
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62 w
Kuddos to Desiree. I'm very familiar with dominant hierarchies were if you dare to see the king naked you are punished. These restrictive and tropophobic dominant hierarchies are the cause of all the pathologies we have encountered since the industrial revolution but especially since the 1950s when these organizational structures were no longer capable of dealing with the increasing relevant uncertainties of our times. Hence the importance of courageous people like Desiree to take on these dominant hierarchies to transform them into enhancive and tropophilic non-dominant hierarchies. <https://www.amazon.com/TROPOPHILIA-Thriving-Uncertainty-Wandemberg-Ph-D-ebook/dp/B078ZHSWWB>
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62 w
Despite Desiree fixler working at the world leading bank it was also her dream job,but with the love of sustainability for our environment she had to break the ice. They top management didn't give her word a green light but they got the red light themselves. How they revised down ESG assets under DWS by 75 percent,is enough evidence to this scandal they are just pretenders and liars.
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62 w
It’s people like Desiree who bravely stand up, stand on the side of truth and are instrumental in creating change, global reaching change. This sets a precedence in ESG reporting and greenwashing. ESG requires a global framework and standards, which will help close the gap on ‘making it up so we can look good’ organisations who lie about their ESG performances in this space.
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62 w
This was really nice. Though am getting the information late. I really love this
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63 w
This such an incredible story. Hopefully Stefanie's action can inspire others to follow!
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63 w
WOW, this story could make a great plot for a thriller novel or a Netflix series. Glad something is being done against greenwashing!
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63 w
@sameen_shahid We are only at the beginning and we need everyone to spread the word and take responsibility
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63 w
Hats off to this lady for putting the environment first
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63 w
What a brave lady!. A huge shame to Deutsche Bank.
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63 w
@waigwa_monica yes! Desiree Fixler is my hero!
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63 w
Greenwashing is the worst form of crime when it comes to climate change and should not be tolerated with. Now the managers can be held accountable.
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63 w
@tabitha_kimani Well, they CAN be held accountable but will they? In this case, the CEO had to resign, but the chairman who should have reacted but didn't is still around. And the whole story could only happen because most managers still don't fell responsible for the future of mankind and the planet.
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63 w
I cannot understand why this story isn’t the talk of the town. And why the investigations are still under way. We must all learn from this case of colossal corporate governance failure. But also system failure. We need to define what ESG really means and where we draw the line.
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63 w
@stefanie_hauer I agree. We need to push this story from Grass root level! Thanks for you important work!
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@Rentzhog And thank you for your support. You have created the best platform for our movement.
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63 w
Desiree Fixler's actions are very inspiring, I really hope that this will make other banks and investment companies be afraid of greenwashing!