ESG, Whistleblowing, And Compliance Programs: Key Takeaways From A Recent ESG Misstatement Case

On September 25, the U.S. Securities and Exchange Commission (SEC) announced a US$19 million settlement with the investment adviser DWS Investment Management Americas Inc. (DIMA) for material misstatements and shortcomings in its policies and procedures related to Environmental, Social and Governance (ESG) investing.¹ The Order resolves a longstanding investigation by the SEC into "greenwashing" allegations against Deutsche Bank AG's asset-management arm, DWS Group (DWS), which we discussed in our September 20, 2021 Advisory.

The order provides a roadmap of areas for compliance that the SEC may scrutinize in future ESG investigations. The SEC focused on lack of: (1) training, (2) testing, (3) controls, (4) standards for management, (5) consistency in approach, and (6) remediation once it recognized the inconsistencies. To settle charges brought under the Investment Advisers Act and the SEC's rules promulgated thereunder, DIMA agreed, without admitting or denying