DWS Group chief executive Asoka Woehrmann will resign on 9 June in a move the president of parent company Deutsche Bank described as “testament to his sense of responsibility”.
His departure follows swiftly in the wake of German federal police and officers from the country’s financial regulator, BaFin, raiding the firm’s offices in Frankfurt on 31 May.
An investigation was launched by the regulator last summer into allegations of breaches of ESG requirements, months after the asset manager’s sacked head of sustainability, Desiree Fixler, told the Wall Street Journal the firm overstated its use of sustainable investment criteria in its investments.
An accusation DWS strongly denied at the time.
A burden on his family
Of his decision to resign, Woehrmann said: “I have always dedicated my entire energy to the benefit of DWS; most notably since returning as CEO in October 2018.
“Today, after the three most successful years in its history, DWS is significantly more profitable, is stable and has continued to perform well in a difficult market environment. At the same time, the allegations made against DWS and myself in past months have become a burden for the company, as well as for my family and me.
“In order to protect the institution and those closest to me, I would like to clear the way for a fresh start.”
Woehrmann spent 17 years at DWS, working in various functions, including serving as global chief investment officer before moving to parent company Deutsche Bank in 2015 to take up the role of head of the private client business in Germany at its Private & Commercial Bank.
‘Great respect for his decision’
Stefan Hoops, previously head of the corporate bank at Deutsche Bank, will become chief executive on 10 June, subject to regulatory approvals.
Karl von Rohr, Deutsche Bank president and chairman of the supervisory board of DWS, said: “I would like to thank Asoka Woehrmann for his many years of passionate work and commitment to DWS. Thanks to his leadership, DWS has reached new heights, successfully established itself on the stock exchange and is very well positioned for the future.
“I have great respect for his decision to resign – it is a testament to his sense of responsibility.
“With Stefan Hoops, an outstanding manager stands ready to take over at the helm of DWS,” added von Rohr. “In recent years, he has demonstrated both his capital markets expertise and his excellent leadership qualities in various positions. His strategic foresight and experience in digitalisation will provide important impetus for the continued development of DWS.”
Hoops joined Deutsche Bank in fixed income sales in 2003, moving to credit trading in New York in 2008. He took on various leadership roles within global markets in the US and Germany in the following years, including global head of institutional sales.
In October 2018, he was named head of global transaction banking and, since July 2019, he has headed DB’s corporate bank.
DWS ‘remains committed to clarifying any and all queries’
Commenting on Tuesday’s raid, a DWS statement seen by our sister publication ESG Clarity said: “We have continuously cooperated fully with all relevant regulators and authorities on this matter and will continue to do so.”
In a statement, the German prosecutors said that “sufficient factual evidence has emerged” ESG factors were taken into account in a minority of investments “but were not taken into account at all in a large number of investments”, which would be contrary to statements in DWS fund sales prospectuses.
The raid is reported to have come unannounced but follows other forms of contact by the prosecutors.
“We understand a variety of actions are required to ensure a thorough and complete investigative process. We remain committed to working with any authorised bodies to clarify any and all queries they may have,” DWS said.
Once is an anomaly – twice is a pattern
BaFin’s investigation follows a similar one launched by the US Securities and Exchange Commission after DWS’s former head of sustainability, Desiree Fixler, told the Wall Street Journal the firm overstated its use of sustainable investing criteria in its investments.
Fixler, who was fired from her role in March last year, is reported to have flagged concerns with the firm’s ESG risk management system to the DWS management board in November 2020, and claims misleading statements were made in DWS’s 2020 annual report, published in March 2021, which said more than half of its $900bn assets were invested using ESG criteria.
In a statement on 26 August 2021, DWS said: “As we disclosed in our Annual Report 2020 on page 90, DWS labelled strategies as ‘ESG Integrated’ if they were actively managed and included coverage of ESG data (the overall SynRating) on more than 90% of the portfolio. ‘ESG Integrated AUM’ were not counted towards the firm’s ‘ESG AUM’ (‘ESG Dedicated’). The absolute numbers are transparently listed on page 92 and 93 of our Annual Report 2020.
“In our more recent half-year report published in July 2021, we reported €70.1bn of ESG AuM (‘ESG Dedicated’) after applying our revised ESG product classification approach in accordance with the new SFDR guidelines. In addition, we reported €16.4bn of illiquid green-labelled single assets in non-ESG classified products.”
Tuesday’s statement from DWS said: “We continue to fully stand behind our company statement of 26 August 2021, standing by our disclosures.”
This article was co-written by ESG Clarity news editor Natasha Turner.