DWS is further advancing its engagement policy towards defining and tracking sustainability outcomes at investee companies.

In a short article written for the Eurosif’s report ‘Fostering investors impact placing it at the heart of sustainable finance’, DWS explained that it will define three clusters of engagement – strategic, focus and core – mirroring the degree of interaction with the companies it invests in and outcome targets relating to sustainability based on the Sustainable Development Goals (SDGs).

With the strategic cluster, DWS will work with investee companies on ESG and non-ESG targets with a potential to “de-risk” them, it said.

The asset manager will take different approaches on an ad-hoc basis with the so-called focus cluster.

In the case of certain investee companies, for example, the engagement will focus on climate or the violation of norms, or governance issues, while for others it could focus on specific sustainability issues.

With the core cluster approach, instead, the main focus of engagement activities will be on corporate governance values and broader environmental and social issues, it added.

DWS is responding to a growing trend among clients that plan to keep on top of the impact of their investments, it said. Last year, discussions with institutional clients revolved mostly around decarbonisation.

Climate-related goals are part of DWS’s engagement policy aiming to force investee companies towards meeting net-zero targets.

The asset manager will hold companies’ boards and management accountable if they fail to manage risks associated with climate change, it said.

It will move on to other key areas of activity, namely the interaction with accounting standard boards and public advocacy programmes with governments, after investee and client engagement.

According to DWS, in fact, asset managers can actively support the transition to a low carbon economy, and achieve net zero in four key areas including portfolio company engagement, client engagement, interaction with accounting standard boards and public advocacy programmes with governments.

The German asset manager has recently been hit by accusations of greenwashing by its former head of sustainability, Desiree Fixler. German regulator BaFin and US authorities have started to investigate accusations of misleading clients on sustainable investments, according to reports. DWS rejects the allegations.

DWS will be responsible for executing an investment programme in renewable energy production and de-carbonisation in Sub-Saharan Africa following an agreement between Deutsche Bank and the Green Climate Fund (GCF) at COP26.

Deutsche Bank, the majority-owner of DWS, has set an interim net-zero goal to manage 35.4% of total assets under management, worth €281.3bn, by 2030.

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