BCL partner, Richard Reichman discusses with Investors’ Chronicle the likely approach UK regulators will adopt in an attempt to stop financial institutions suspected of making misleading green claims. This comes after a raid of a German Asset Management firm last month, that prompted a criminal probe following allegations of so-called ‘greenwashing’ by the organisation.
Here is a short extract from the article*. If you wish to read the full article, please visit Investors’ Chronicle website.
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.
….“I think we’ll almost certainly see similar action to the DWS raid in the UK, of a financial institution suspected of making misleading green claims,” said Richard Reichman, a partner at BCL Solicitors specialising in corporate crime. “But I think the most likely scenario that we’ll see is direct civil fines imposed by the Competition and Markets Authority (CMA), rather than an influx of prosecutions.”
*This article was first published by Investors’ Chronicle on 14 June 2022. If you wish to read the full article, please visit Investors’ Chronicle website.