Elon Musk crows as German authorities start treating greenwashing as fraud
Good morning. David Meyer here in Berlin, filling in for Alan.
The backlash against greenwashing is really getting real now.
Yesterday, German authorities raided the offices of Deutsche Bank and its DWS asset-management unit, looking for evidence in their investigation of alleged greenwashing—which they are treating as fraud.
As a spokesperson for the public prosecutor told Fortune’s Christiaan Hetzner: “The allegations are that DWS has been advertising so-called ESG financial products for sale as being particularly green and sustainable when they actually weren’t. In the course of our investigations we’ve found evidence that could support allegations of prospectus fraud.”
Specifically, DWS stands accused of falsely claiming in its 2020 annual report that most of its assets were invested using ESG criteria. Not so, said a whistleblower. And this morning, hours after the raids, DWS announced that CEO Asoka Wöhrmann will step down on June 10. (It maintains, however, that there was no wrongdoing.)
You know who’s not surprised? Elon Musk, who has been grumbling about ESG metrics since Tesla got kicked off the S&P 500’s ESG list last month—its environmental cred is fairly solid, but not so much its performance regarding the “social” part of ESG, which Musk claims has been “weaponized by phony social justice warriors.”
“I have yet to see an ESG list that *isn’t* fraudulent,” Musk snarked in response to someone’s tweet featuring Christiaan’s story.
The culture warrior—who also just informed Tesla staff that “remote work is no longer acceptable,” raising a different kind of social question—clearly has his own ax to grind, but it’s equally apparent that the validity of ESG claims is under unprecedented scrutiny. And given what’s at stake, that is no bad thing at all.
More news below.
The U.S. will send $700 million worth of arms to Ukraine, including the advanced multiple launch rocket systems (MLRS) that Kyiv has been asking for. As President Biden previously signaled, the systems and their rockets will be medium-range, and the Ukrainians have promised not to fire them into Russia. (Bonus read: The Russians bombed a nitric acid tank at a chemical plant in Sievierodonetsk, the Luhansk city they’re turning into the new Mariupol, so residents have been told to stay in their shelters for fear of toxic exposure.) CBS News
Russia, which is in the process of being hit by a European oil embargo, has cut off more natural-gas supplies to Europe. The Netherlands’ GasTerra no longer has Russian gas coming in, and Gazprom has also stemmed flows to Denmark’s Ørsted and to Shell’s German operations, because those energy companies failed to pay in rubles as Putin demands. (Bonus read: The U.K. and EU are both banning insuring ships that carry Russian oil.) Guardian
Speaking of Denmark…
Danes are today voting in referendum over their country’s accession to the EU’s defense pact. Denmark is a founding NATO member but, of those 21 EU member states that belong to the wider Western security pact, it’s the only one that has so far declined to join the intra-EU alternative—Denmark is hardly the most integration-happy EU country; it doesn’t use the euro, for example. Bloomberg
Dominion Voting Systems’ equipment, as used in at least 16 U.S. states, has software vulnerabilities that could allow hacking—although the U.S. Cybersecurity and Infrastructure Agency (CISA) says there’s no evidence of past election results having been altered. Fortune
AROUND THE WATERCOOLER
Waiting in the sky
Fortune’s Vivienne Walt reports on how Ukraine’s military is using SpaceX’s Starlink satellite-communications system: “Mobile and light, the Starlink terminals have been carried by soldiers and civilians from one battle zone to another, and between bomb-blasted towns, across a territory the size of Texas. They’re not only benefiting combat forces, but also allowing doctors to resume treating patients, helping officials administer services, and enabling those who stayed to call loved ones who have fled the country.” Fortune
European consumer groups are waging war on gaming companies’ use of “loot boxes”—filled with random stuff that could be useful, or not—to extract billions of dollars from players. They want strong EU regulation that would stop studios manipulating people with “deceptive designs”, make it clearer what loot boxes actually cost, and change game marketing to include the odds of getting something good. Fortune
Many expat executives are reportedly fleeing the Saudi “gigaprojects” that they were brought in to develop, such as Riyadh’s new $10 billion financial district and the futuristic Neom city-state. That’s because of an awful management culture that belittles, demeans and sometimes terrifies them. Wall Street Journal
The U.K.’s finance ministry is considering allowing regulators to step in to “help mitigate consumer, market integrity and financial stability risks” when a stablecoin collapses à la TerraUSD. Decentralized finance at its finest! Reuters
This edition of CEO Daily was edited by David Meyer.
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