Germany’s DekaBank has avoided legal action on the sustainability claims of one of its retail funds by removing an allegedly misleading impact calculator used to market it.
Earlier this year, RI reported that the consumer protection agency for the German state of Baden-Württemberg had sought “judicial clarification” on the impact claims DekaBank made about its Deka-Sustainability Impact Fund.
In its lawsuit, the watchdog argued that the bank only acknowledged in its small print that the fund’s seemingly concrete sustainability impacts, as calculated by the in-house calculator, were based on estimates, not evidence.
Among the claims made by the now-removed tool was that a €10,000 investment in the fund could lead to a CO2 reduction of 575kg, equivalent to driving 3,597km in a diesel car.
Speaking about the case, Christian Klein, Professor of Sustainable Finance at the University of Kassel, told RI that it is “very important to first agree on what we mean by ‘impact’ to avoid possible misunderstandings in its use”. “A statement such as "putting 10,000 euros in this investment leads to X tons of CO2 being saved" must be substantiated”, he said.
Impact claims made about sustainability products by some fund managers were described as like the “Wild West” last year by Jakob Thomä, Director at think tank 2Dii Investing Initiative.
Initially, DekaBank said it would fight the case, calling the accusations “ungrounded”, but it has now removed the calculator and recognised the watchdog’s calls for “injunctive relief”.
A spokesperson for DekaBank told RI: “Even though we considered our legal prospects of success to be good, we had no interest in conducting legal proceedings over several instances on such a socially important issue”.
“Our concern is rather to develop an appropriate, transparent and generally accepted presentation of the sustainability impact of corresponding fund investments. Precisely because there is still no generally accepted solution concept for this, we consider a legal dispute based on petty arguments on questions of advertising law to be of little use,” she added.
By removing the calculator and formally recognising the claims of the watchdog, the court proceedings, which were due to start last week, have been terminated, the DekaBank spokesperson confirmed.
The bank’s decision was welcomed by Niels Nauhauser, Head of Department at the Baden-Württemberg Consumer Centre.
Earlier this year, German investors – including Dekabank – called on their government to develop a sustainability rating for all investment funds on a numerical scale of 1-5. That recommendation was part of the report by Germany’s Sustainable Finance Committee, a group of private- and public-sector players appointed by the federal government to advise it on boosting ESG investing in the country.