DWS has launched a new external investigation into allegations it misrepresented its environmental, social and governance (ESG) credentials to clients. 

The German asset manager has hired US law firm Sullivan & Cromwell to deal with the greenwashing claims as the Securities and Exchange Commission (SEC) and German regulator BaFin continue their inquiry, Bloomberg reported, citing people familiar with the situation. 

One of the sources said the Deutsche Bank-owned asset manager has appointed the legal firm to represent the fund house with its interactions with the SEC, adding the probe goes further than the allegations made by its former group sustainability officer Desiree Fixler. 

DWS declined to comment. 

Fixler sounded the alarm on the actions of DWS in August, telling the Wall Street Journal that the German asset manager was painting a rosier-than-reality picture to investors. 

DWS shares fell 13.5% following the WSJ piece and have since failed to recover. 

She was the first person appointed to this role at the firm in September 2020, however, was dismissed in April this year. Her dismissal is currently being investigated by an employee tribunal. 

She first raised concerns in November 2020 to the DWS management board claiming the ESG risk management system used by the firm was highly flawed as it relied on outdated technology. 

German regulator BaFin has also launched an investigation into the claims made by Fixler that there were misleading statements in the firm’s annual report in 2020, signed off by Deutsche Bank’s president Karl von Rohr.  

Deutsche Bank, which owns almost 80% of the Frankfurt-listed asset manager, first asked PwC to review the greenwashing allegations days after Fixler sent the document outlining her concerns to the Von Rohr, also DWS’s supervisory board chair, in March, Bloomberg reported.  

PwC subsequently found that the fund manager had not engaged in greenwashing.  

The firm’s ESG credentials came under fire last year when one sustainable active fund, the DWS ESG Investa, included Wirecard in its portfolio until mid-June 2020, just two weeks before the payments company entirely collapsed due to accounting fraud. 

The issuer is in the process of switching the index on several of its ETFs to indexes to one that incorporates ESG metrics.