Njagulj was not speaking on a panel overtly about greenwashing, which was to come later on Tuesday morning.

But the DWS professional was part of a panel entitled "The G: the black box of ESG" moderated by Vivienne King, head of real estate social impact at The Good Economy.

Joined by Guy Thomas, head of place assets from Lendlease and Mathieu Elshout, head of sustainability and impact investing at Patrizia, there was no allusion to police raids that took place in Frankfurt in May at the headquarters of DWS and its majority owner, Deutsche Bank. Both companies deny any wrongdoing. 

Nevertheless, Njagulj touched on issues such as a current backlash in the US against ESG, and how to operate in a global environment with so many regulations that often do not sync.

US backlash
Highlighting influential lobby group, the American Legislative Exchange Council (Alec), she said: ‘We are at the moment a little bit in a situation of being between a rock and a hard place. There is quite a bit of a backlash against ESG generally, starting with fossil fuels but expanding now.’

Last year, right wing conservation group Alec introduced model legislation which was first used and passed into law by Texas. The law effectively blacklists those financial organisations who have explicitly stated they will divest fossil fuel related investments.

Oher states with significant fossil fuel producers that are folliwng in Texas' footsteps by adopting The Energy Discrimination Elimination Act include Louisiana, West Virginia, Oklahoma, and Kansas.

Said Njagulj: ‘All these states want to continue to produce fossil fuels regardless of the consequence and do not want to be discriminated against. They say they are going to blacklist those asset managers and banks that are explicitly divesting from fossil fuels. They send questionnaires to all the main asset managers and global ones like us asking if we are explicitly divesting fossil fuels. You can see a lot of backtracking on statements because this is half of the US. What is the best approach? Do you exclude such states or do you engage and do the best you can with them? My attitude was always really practical: what was the best I could do in this situation?’

She continued: ‘You need to see what is reality and what you can do within your fiduciary constraints because we have contractual obligations. That is good governance. You do the best that you can.’

Later in the discussion, panellists were asked about the level of global regulation and consequences for investment managers.

‘We have a privilege in real estate to be able to base our targets and our ambitions on physical measures - on actual real life,’ said Njagulj, who began her career in the built environment as an architect before joining Bouygues in the UK and rising to become global head of ESG at CBRE Investment Management before joining DWS in August 2021.

‘My view about this whole mass of regulation is to use our privilege by basing our strategy on physical things such as the actual carbon intensity or indoor air quality that can be measured and around which you can base your strategy.’

‘Is it a solid strategy and within our fiduciary strategies? Then you look to see how that relates to regulations. So, it is taking a look at what you can really achieve physically with assets. Then everything else is the compliance with regulations, which can simply be how you measure and how transparent you are.’

Regulations
Regulations she mentioned included the EU’s new Sustainable Finance Disclosure Regulation (SFDR), and “traffic light” based taxonomies in Asia, as well as the SEC’s recent proposed amendments to rules and reporting forms to promote consistent, comparable and reliable information for investors concerning funds’ and advisors’ incorporation of ESG factors.

The SFDR is Europe’s regulation aimed at improving transparency in the market for sustainable investment products, to prevent greenwashing, and to increase transparency around sustainability claims made by financial players.

According to the classification system, a fund is categorised as either having no sustainability scope (Article 6), or some environmental or social characteristics (Article 8, light green), or having sustainable investment as its objective (Article 9, dark green).

The level of disclosure required depends upon how the fund is categorised.

Njagulj said clarification was being sought on building refurbishments because building transformations appeared not to be part of Article 9, which is seen as being for impact investments.

‘You are theoretically diverting funds of the most ambitious investors away from transforming the building, which is exactly what we should be doing. So that is why I was saying, look at your strategy. Does your strategy make sense for the asset that you want to have, and then look at regulation and to see how you have to report it.’