At the Crossroads of ESG Disclosures and Whistleblowing: What Companies Need to Know Now (ESG Advisory Series, Part 5)

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The SEC and DOJ are reportedly investigating greenwashing allegations made by the former head of sustainability of Deutsche Bank AG’s asset-management arm, DWS Group, including allegations that DWS overstated how much it used sustainable investing criteria to manage its assets. DWS disclosed in its 2020 annual report that it invested more than half of its $900 billion in assets using a system called ESG integration, where companies are graded using ESG criteria. However, an internal assessment done a month earlier reportedly said that only a fraction of these assets applied the ESG integration process and that there was no quantifiable or verifiable ESG-integration for key DWS asset classes.

These allegations raise key considerations concerning the intersection of two high-priority matters for the SEC: (i) the adequacy and accuracy of ESG-related disclosures and (ii) the strengthening of the SEC’s whistleblower rules to encourage whistleblowers to come forward.