After years of unchecked ESG claims, the fund management industry now faces a much tougher regulatory environment as authorities try to eradicate greenwashing. The vigour with which potentially misleading claims of green investing are being challenged became clear in late August, when it emerged that Deutsche Bank AG’s asset management arm DWS Group was being investigated in the U.S. and Germany. DWS, which has denied it misstated the scope of its ESG business, has yet to recover from a 14% share-price slump triggered by an investor panic.
Shareholders are treating European asset managers with caution amid signs the industry is facing a regulatory crackdown on its claims around environmental, social and governance investing, according to a fresh analysis.
The share prices of asset managers in Europe “have unexpectedly disconnected” from their estimated earnings, according to Mandeep Jagpal, an analyst at RBC Capital Markets in London. Consensus earnings are up 7% since the end of the second-quarter reporting period, while share prices across the industry have fallen by 8%, he said in a client note on Tuesday.
