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PwC advised DWS on sustainability while investigating greenwashing claims

Deutsche Bank AG updates

PwC was advising DWS on sustainability at the same time as the accounting firm was investigating and dismissing whistleblower allegations of large-scale greenwashing at the asset manager, raising questions over the independence of the probe.

The allegations were made in mid-March by DWS’ former head of sustainability Desiree Fixler. Shortly after being sacked, she accused DWS of misrepresenting how it used environmental, social and governance metrics to analyse companies across its investment platform.

Fixler outlined her concerns in a five-page dossier, seen by the Financial Times, she emailed to DWS chair Karl von Rohr on March 17.

After the allegations were reported by the Wall Street Journal last month, US and German regulators launched investigations, sending the asset manager’s share price sharply down.

Christian Sewing, CEO of Deutsche Bank, DWS’ biggest shareholder, told analysts on Friday the discussions about alleged greenwashing were mere “noises”. He also highlighted the need to be “very careful and very disciplined and very diligent in your [ESG] processes, in your reporting, in your measurement and also in deciding is it ESG conform or is it not?”

DWS denies all wrongdoing and mandated PwC to investigate the allegations days after the firm received the dossier.

In a video call on March 23, key DWS supervisory board members agreed to “take [all of Fixler’s allegations] seriously and properly assess [them]”, according to a document seen by the FT. They tasked Martin Weirich, a consulting partner at PwC, with assessing the claims in a “fact finding exercise” code-named ‘Gamma’.

At the same time, a different PwC team led by partner Nicole Röttmer was advising the asset manager on how to meet its goal of net zero emissions by at least 2050.

DWS paid about €300,000 for PwC’s net-zero consulting, which has been concluded, according to people with direct knowledge of the matter. The asset manager was also in talks with PwC in early 2021 to license sustainability tools costing about €50,000 a year, which they eventually decided against, one of the people said.

During project “Gamma”, the Big Four firm interviewed seven senior DWS employees and examined emails and presentations that Fixler had mentioned.

Concerning the most contentious issue — that the volume of assets that have gone through a so-called ESG integration process was overstated in the annual report — PwC reviewed working papers of DWS’ auditor KPMG.

PwC found that the ESG classification was based on a formal process, and that the numbers were challenged by KPMG during the annual audit, people familiar with the probe said. “The number that was reported in the annual report was smaller than in the initial internal one,” said one person.

In mid-May, PwC said in a 42-page report, that it “could not identify substance within the allegations”. PwC also dismissed Fixler’s claim that she was fired in retaliation for raising concerns internally.

Fixler told the FT she “would like to know how PwC managed the potential conflict of interest between its commercial ESG engagement and the audit in the same area” and pointed out that she was not contacted at any point during the investigation.

In an executive summary of the investigation, PwC on May 21 stated that “no further data collection (eg via outreach to Ms Fixler) is necessary at this point”, arguing the “context and facts related to her allegations can be established in our view by available data items provided by DWS”.

However, Fixler said PwC should have contacted her about other concerns that were in her email to the DWS chair, but not in her more detailed dossier, including what she considered to be “lax” anti-financial crime controls.

One person close to a European financial regulator, said that although it was “interesting” that PwC did not contact Fixler, the investigation itself had been “thorough” and had not been undermined by the firm’s advisory mandate.

Both of the two PwC partners declined to comment. PwC also declined to comment on its different DWS mandates, citing client confidentiality but said that “it is important to note that the fears you insinuate regarding our independence or conflicts of interest are unfounded”.

DWS said that it “stands by its disclosures in its annual reports. DWS firmly rejects the unfounded allegations being made by a former employee.”


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