As environmental, social, and governance (ESG) investing gains traction, regulators are intensifying their scrutiny of greenwashing—where companies or funds mislead investors about their ESG credentials. Recent enforcement actions by the U.S. Securities and Exchange Commission (SEC) against Invesco Advisers Inc. and DWS Securities, a Deutsche Bank subsidiary, highlight this trend.
Invesco’s $17.5 Million Penalty
Invesco Advisers Inc. was fined $17.5 million (RM77.07 million) by the SEC for overstating the integration of ESG factors across its assets under management (AUM). From 2020 to 2022, Invesco claimed 70–94% of its parent company’s AUM were ESG-integrated, despite holding substantial assets in passive funds that didn’t consider ESG factors.
Moreover, the SEC found that Invesco lacked a written policy defining ESG integration. This gap misled clients and eroded trust, prompting Sanjay Wadhwa, Acting Director of SEC Enforcement, to state:
“Companies should be straightforward with their clients and investors rather than seeking to capitalise on investing trends and buzzwords.”
DWS Securities Fined $25 Million
Deutsche Bank’s DWS Securities faced a combined $25 million penalty for two infractions:
- Greenwashing: The firm paid $19 million for misleading investors about its ESG integration controls and policies from 2018 to 2021.
- Anti-Money Laundering (AML) Violations: DWS also paid $6 million for failing to establish an adequate AML program to detect illegal activities.
The SEC’s actions underscore its commitment to ensuring that funds labeled as ESG adhere to stated investment objectives. The agency has also proposed updates to the “Names Rule,” requiring at least 80% of a fund’s assets to align with its marketed focus, including ESG and other themes.
Global Greenwashing Fines
These cases are part of a broader global effort to tackle greenwashing. Significant penalties include:
| Company | Fine (US$) | Reason for fine |
| Volkswagen | $34.69 billion | The car company paid these fines in several countries from 2017 to 2020 for implementing software that falsified data and helped evade emissions tests on its vehicles. |
| Toyota | $180 million | Delayed sharing of emissions-related reports. Paid these fines in the United States in 2021. |
| DWS | $25 million | The Deutsche Bank-controlled investment firm paid these fines in a settlement with the US Securities and Exchange Commission for potentially marketing ESG funds as “greener” than they actually were. |
| Keurig | $12.2 million | The coffee pod company paid this fine to Canadian regulators for making misleading claims about its single-use coffee pods, suggesting they were recyclable when recyclers don’t widely accept them |
| Eni | $5.6 million | The Italian energy company paid these penalties to Italian regulators for claiming its palm oil diesel was “green.” |
| Kohl’s & Walmart | $5.5 million (combined) | The retail giants paid this collective settlement with the Federal Trade Commission in 2022 for claiming their products were made from environmentally friendly bamboo when they were made from other materials. |
| Goldman Sachs | $4 million | The investment bank agreed to pay these finds to the SEC in 2022 for failing to follow ESG investment policies and misleading its customers. |
| BNY Mellon | $1.5 million | The Bank of New York Mellon paid these fines to the SEC For failing to implement ESG policies and overstating the ESG value of its funds. |
| H&M & Decathlon | $430,500 and $530,000 | These two clothing retailers made these donations to sustainable causes in 2022 after making unsubstantiated claims on their labels. |
The Growing Demand for ESG Accountability
The SEC’s actions signal a shift toward stricter enforcement of ESG disclosures. Investors now demand greater transparency as ESG factors increasingly influence financial decision-making. Companies must align their practices with their promises to avoid reputational damage and legal consequences.
The crackdown on greenwashing highlights a clear message: ESG claims must reflect reality, not marketing hype.
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