The case has dogged the German financial firm for several years since a top executive came forward with "greenwashing" allegations, with investigators repeatedly raiding the asset manager's offices and DWS's boss forced to quit in 2022.
It has also highlighted growing worries about how to police a surge in "environmental, social and governance" (ESG) investing as companies and institutions seek to bring portfolios in line with climate targets.
Unveiling the penalty, prosecutors in the German financial capital Frankfurt said DWS had "extensively" advertised financial products which claimed to have ESG characteristics from 2020 to 2023.
But investigations, carried out by prosecutors and police, found that "statements in external communications, such as claiming to be a 'leader' in the ESG area or stating 'ESG is an integral part of our DNA' did not correspond to reality," they said.
While a "transformation process" was underway at the firm, it had not yet been completed, they said, adding: "Statements in external relations must not go beyond what can actually be implemented."
The asset manager said it accepted the fine, admitting that "in the past our marketing was sometimes exuberant" but insisting that improvements had already been made.
DWS had already been hit in 2023 with $19-million penalty by financial regulators in the United States over misleading green statements.
- 'Historically high' fine -
Greenpeace said it was the highest ever penalty imposed in Europe's biggest economy for a such an offence.
"This historically high penalty payment for greenwashing is a clear wake-up call for the entire industry: consumer deception is not a trivial offence but fraud," said Mauricio Vargas, a financial expert with the environmental advocacy group.
He accused DWS of scaling back its sustainable finance efforts in response to the allegations, which he described as a "slap in the face to its customers", and also of continuing to invest heavily in fossil fuels.
The "greenwashing" scandal first emerged at DWS after its former chief sustainability officer, Desiree Fixler, came forward with "greenwashing" allegations in 2021.
Several raids followed at the asset manager and Deutsche Bank's offices in Frankfurt, and DWS chief executive Asoka Woehrmann stepped down in June 2022, saying the allegations had become a "burden".
While ESG products have in recent years become a major asset class, critics worry about what they say is a lack of standardised data and criteria to prove such investments are truly sustainable.
The European Union's markets authority last year issued new rules to combat "greenwashing" in finance, laying out what criteria needed to be met for a fund to have "ESG" or "sustainable" in its name.
Troubles at its asset management arm are also another blow to Deutsche Bank, which has undergone a major restructuring in recent years after an aggressive shift in the early 2000s into investment banking drew it into multiple scandals.
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