After the scandal surrounding greenwashing allegations against DWS, CEO Stefan Hoops, who has been in office since the summer, is striking a new note.

Advertising for ecologically and socially responsible investments, which are referred to by the acronym ESG in industry jargon, must be reconsidered, the boss told journalists on Wednesday on the sidelines of the fund company's capital market day.

In hindsight, there was "exuberant marketing for quite a while" that should be scaled back.

Nevertheless, DWS wants to “remain the flag bearer for ESG in Europe”.

Tim Kanning

Editor in Business.

  • Follow I follow

It is the first time that Deutsche Bank's investment company has shown any trace of remorse in the matter.

The greening scandal was triggered by the company's short-term head of sustainability, Desiree Fixler, who, after her dismissal, accused the fund company of presenting many funds as more sustainable than they really are.

This led to investigations by various supervisory authorities, including a raid on the Frankfurt headquarters, and ultimately triggered the departure of CEO Asoka Wöhrmann.

Only two weeks ago, the premature departure of long-time investment boss Stefan Kreuzkamp was announced.

Greenwashing remains the dominant issue

The internal investigation into the allegations is nearing completion, Hoops said.

He continues to stand by the company's disclosures.

He took a close look at how DWS came up with its previous ESG disclosures, especially the disclosures in the 2020 and 2021 annual reports, which Fixler had criticized.

His review convinced him that the information was correct at the time, even though DWS now handles its ESG disclosures differently due to evolving regulation.

How great the interest of shareholders in the topic is is shown by the fact that around 70 percent of the questions that investors submitted before the Capital Markets Day were asked on this topic, according to Hoops.

Among other things, he now wants to create new structures in order to make employees more responsible for the ESG criteria: An internal supervisory body and direct reporting channels to the CEO are to monitor the marketing of sustainable financial products more closely.

ETF business to be expanded

The former Deutsche Bank manager, who moved to the top of the asset manager after Wöhrmann's departure, also used the capital market day to make DWS more attractive to investors with new goals and a more generous dividend policy.

The aim is to make DWS more profitable by 2025 by focusing on the segments in which it is successful.

As an example, Hoops cited the Xtrackers brand, under which DWS sells its passive products such as ETFs, which are becoming increasingly popular with many investors.

A good quarter of the 833 billion euros that DWS currently manages are in such passive funds.

DWS also wants to become more active in the business with alternative investments such as infrastructure.

Hoops wants to sell other segments and reduce its regional presence.

In this way, earnings per share are expected to increase from EUR 3.90 to EUR 4.50 in three years.

The fund company then only wants to spend 59 cents per euro earned.

This should enable a payout ratio of 65 percent from 2025.

For 2024, Hoops promised a special dividend of up to 1 billion euros.

The stock exchange celebrates the new plans

Among other things, he wants to free up the money for the conversions by dismantling hierarchies.

Other new cost initiatives are also planned.

An independent IT platform should bring higher cost savings and more flexibility.

The new plans of the company listed in the S-Dax were well received on the stock exchange.

The share price temporarily increased by 8 percent.

Since the greenwashing allegations came up in August 2021, the price had dropped from just under 40 euros at the time to 24 euros in the meantime.

The share is now trading at EUR 31.

Analysts were also positively surprised by Hoop's first major appearance.

Credit Suisse's Haley Tam raised her price target for DWS from €28 to €31.

Mandeep Jagpal from the Canadian bank RBC called the goals ambitious but achievable.

However, the implementation will depend on the development of the financial markets and the mood of investors until 2025.