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Why was Deutsche Bank Accused of Greenwashing?

How did Greenwashing cause the CEO Deutsche Bank to resign after a greenwashing accusation?
Ecology News

Taking the easy pathway to success through greenwashing isn’t the smartest long-term choice, but let’s face it and give credit where it’s due – running a business isn’t easy. Not only do CEOs have to oversee the company’s  structure, strategy, and communication while also maintaining reasonable profit, but these days – they also have to be wary of their environmental impact.

If they aren’t, it can cause havoc – which is exactly what just happened with Deutsche Bank.

The Chief Executive Officer of Deutsche Bank, Asoka Woehrmann, has announced that he will step down from his position following the multiple greenwashing allegations and conspiracies over the years.

The company is in grave danger – as trust has been broken via the media and previous business partners, financial stocks have plummeted, and their mission in sustainability is in question.

How did Deutsche Bank end up the way they did because of greenwashing?

What is greenwashing?

Greenwashing, definition

Greenwashing is when a company claims to commit to environmentally friendly practices, but doesn’t take any concrete effort to encourage or sustain these practices. 🙅

Essentially, greenwashing is a way to market a company to be environmentally friendly without the organization needing to implement carbon-friendly practices that are not determined by the consumer: such as production lines, contributing to carbon offset programs, or using renewable energy sources.

👉 Many companies or brands greenwash, even when they don’t mean to. But many others look for preserving their funds for lucrative opportunities rather than environmental opportunities. 

This is precisely why greenwashing is bad, and ultimately the most ineffective way to promote environmentally sustainability.

What is the difference between greenwashing and whitewashing?

Greenwashing is not to be confused with whitewashing.  

Whitewashing is when a company attempts to avoid a scandal by oversharing numerical data with a limited point of view. In other words, whitewashing is when a business or individual oversells the good in attempts to conceal the bad.

Why companies choose greenwashing over other sustainable practices?

Why do companies choose greenwashing over other sustainable, carbon friendly practices?

Just as it’s easier to purchase a carbon credit or carbon offset, it takes even less effort to implement greenwashing. 

Ironically, greenwashing requires more time and effort than many simple, sustainable practices. Implementing actions to reduce carbon emission is better for business in the long run, as doing so also promotes corporate social responsibility.

Why was Deutsche Bank subject to greenwashing?

So, why was Deutsche Bank subject to greenwashing? A quick recap of events, after Deutsche Bank took ownership of DSW in 2004.

In March 2018, Deutsche Bank demonstrated whitewashing when they made an attempt to bypass a multitude of lawsuits and scandals by publishing reports claiming that their investments were sustainable. 

In May 2020, DWS flaunted their perceived sustainable investments, claiming they would seek to find which companies posed the greatest carbon risk. In June, after Desiree Fixler was hired as a sustainability officer for DSW –  she alerted investigators and journalists that DWS were greenwashing their consumers about their investments.

In March 2021, DWS' supervisory board discovered Fixler's testimonies and released a review. She left the company shortly after. 

In July 2021, despite DWS deciding to not further investigate Fixler’s allegations, the media reported that the U.S. Securities and Exchange Commission is looking into the situation. A few months later, DWS created a committee solely responsible for tackling the claims.

In January 2022, the CEO, Woehrmann, started to receive threats despite continuing to deny the allegations. Still, The European Central Bank investigated Woehrmann and potential problems with corporate governance.

By May, Prosecutors, along with police and other officials, raid DWS and Deutsche Bank. Prosecutors said they are following up on news reports and the whistleblower's claims. The prosecutors gather "sufficient factual evidence" that environmental, social and governance (ESG) factors "were not taken into account at all in a large number of investments", contrary to statements in DWS fund sales prospectuses. 

Most recently in June, after Deutsche Bank was invaded in search of incriminating evidence, CEO Asoka Woehrmann announced his resignation as a result of the thorough greenwashing investigation.

What could Deutsche Bank have done to prevent this greenwashing scandal? There were many things that Deutsche Bank could have done differently, but there is one important factor that provoked this climax.

If Deutsche Bank had simply provided numerical data and credible sources to negate the allegations made by Fixler, the following events would’ve been less likely to occur.

What are ESG criteria, which allowed prosecutors to highlight Deutsche Bank's greenwashing?

The investigation against Deutsche Bank was based on the analysis of the three ESG criteria:

  • environmental (reducing greenhouse gas (GHG) emissions, waste management, etc.);
  • social (recruitment of disabled people, training of employees, respect for employees' rights, etc.);
  • and governance (the fight against corruption, etc.).‍

Simply put, these criteria focuses on how a company take sustainable development into account when defining its strategy.

In the case of Deutsche Bank, ESG criteria would have allowed investors to make sure that their money was invested in environmentally friendly funds - to shape an economy, a society and a sustainable world.

👉 However, Deutsche Bank is not the only organization that failed to do this. In May 2022, BNY Mellon was also sanctioned for disseminating false information about the ESG criteria of their investments.

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What about Greenly?

If reading this article about greenwashing has made you interested in reducing your carbon emission to further fight against climate change – Greenly can help you!

Greenly can help you make an environmental change for the better, starting with a carbon footprint assessment to know how much carbon emissions your company produces.

Click here to learn more about Greenly and how we can help you reduce your carbon footprint.

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