Commerzbank AG lost a German suit over green advertising claims against its investment arm as regulators and courts clamp down on efforts from the financial services industry to make money from sustainability-linked products.
(Bloomberg) — Commerzbank AG lost a German suit over green advertising claims against its investment arm as regulators and courts clamp down on efforts from the financial services industry to make money from sustainability-linked products.
A Stuttgart court called the advertising targeted in the case misleading that claimed an investment fund had “measurable ecological effect” because the bank didn’t properly inform investors how the carbon dioxide reduction is calculated, according to a tribunal spokesman.
Consumer group Verbraucherzentrale Baden-Wuerttemberg filed the claim after winning a case against Commerzbank a year ago that targeted it over misleading sustainability claims.
The consumer group labeled as greenwashing at the time.
The court also ruled that Commerz Real, the investment arm, must move a reference to an ESG award that rating agency Scope granted the firm.
The judges said that the bank didn’t inform the investors about the criteria used for granting the award.
Commerzbank Chief Executive Officer Manfred Knof has focused efforts on making more money from the boom in client demand for sustainability-linked products.
He has assigned an important role in strategy to Commerz Real, which is the lender’s asset management arm and focused on real estate. Its funds were the targets in both suits.
A Commerz Real spokesman said the court didn’t ban the word “measurable” but required that investors access the necessary information backing the claim through a link or footnote.
Commerz Real can continue to use the term in advertising if it complies with this requirement, he said.
It’s not the first time a German bank has been forced to reassess how it markets its sustainability products.
Deutsche Bank AG’s investment manager DWS last year was the target of a raid by German prosecutors over greenwashing allegations. While the firm has rejected the allegations and says it continues to stand by its public documents, it has also labeled some previous ESG sales pitches as “exuberant.”
(Updates with Scope award in fourth paragraph.)
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