UK greenwashers could face crackdown following US and German actions

The raid of German asset manager DWS by 50 police officers last month ushered in a new type of corporate scandal. Financial institutions are typically raided because of suspected money laundering or tax fraud. In this case, however, it was allegations of so-called ‘greenwashing’ that prompted the criminal probe – and lawyers believe that UK companies could soon face similar action. 

Greenwashing refers to groundless environmental claims made by businesses in a bid to improve their image. In the case of DWS, the funds arm of Deutsche Bank (DE:DBK), it was targeted after claiming a significant proportion of its funds under management were chosen using strict sustainability criteria. This turned out to be stretching the definition of environmental, social and governance (ESG) investing. 

Until recently, greenwashing was a term largely used by campaigners, accusing companies such as banks and energy companies of misleading the public about their activities, using net zero carbon emission goals to obscure increases in fossil fuel production or lending, for example. But now it could pop up in court as an example of investment fraud. 


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