May 26, 2022 – Vanguard, the world’s second-largest asset manager, today released its “initial commitment” as part of its membership in the Net Zero Asset Managers initiative (NZAM). In the announcement, Vanguard stated that what amounts to less than 5% of its total assets under management are currently in line with net zero by 2050. It expects this number to rise by 2030 but did not commit to a target, did not insist that companies’ net zero commitments be science-based, failed to include its passive index funds in its “commitment,” and failed to demonstrate any ambition to proactively drive emissions reductions in its portfolio.
Vanguard’s climate “pledge” pales in comparison to its industry peers. BlackRock committed to an inadequate but much better 75% of its corporate and sovereign assets, or 58% of its total assets, while several members of the NZAM have committed to 100% net zero alignment.
In response, members of the Vanguard S.O.S. campaign network issued the following statements:
“Vanguard should be laughed right out of the NZAM for this absurd attempt at a climate target,” said Casey Harrell, Senior Strategist at the Sunrise Project. “Today, Vanguard pledged to free ride on the progress of other asset managers in dealing with the climate repercussions of passive index funds. Vanguard needs to start over and do better.”
“Vanguard is just putting off difficult decisions, and the delay will cause more damage to the climate and to its customers than whatever fallout Vanguard is trying to avoid,” said Mary Cerulli, Founder of Climate Finance Action. “Vanguard needs to own up to its leadership position, it cannot hide any more.”
“This pathetic attempt at a climate ‘commitment’ is an insult to everyone living with the reality of the climate crisis,” said Erika Thi Patterson, Campaign Director for Climate and Environmental Justice at the Action Center on Race and the Economy. “Frontline and BIPOC communities already acutely bear the impacts of climate change and generations of environmental racism, and Vanguard’s failure to take meaningful climate action will only exacerbate that.”
“Many of our members are long-time Vanguard customers, who want Vanguard to be part of the climate solution and to protect our financial future in the process,” said Eileen Flanagan, Campaign Director of Earth Quaker Action Team. “Climate pledges this inadequate make us even more determined to build powerful grassroots pressure to wake up Vanguard’s current leadership.”
“Vanguard has proven yet again what an extreme laggard it is on climate by willingly putting itself at the back of the pack among its peers in terms of credible and ambitious climate commitments. Vanguard’s pledge shows it isn’t even trying to keep up with the inadequate status quo,” said Ben Cushing, campaign manager for the Sierra Club’s Fossil-Free Finance campaign. “Vanguard’s failure on climate leadership is indefensible and should call into question the credibility of groups like the Net Zero Asset Managers initiative that allow them to continue as members.”
Details of Vanguard’s announcement
In its statement, Vanguard said that 17% of its actively managed assets are aligned with net zero by 2050. Vanguard’s actively managed funds make up just 20% of its total assets under management (AUM). So only less than 5% of Vanguard’s overall AUM are net zero aligned.
About Vanguard S.O.S.
Vanguard S.O.S. launched last month. It is an international campaign pushing Vanguard to chart a new course away from climate catastrophe and toward truly sustainable and responsible investing. The network is made up of civil society organizations, social movements, and financial experts working together to secure a climate-safe future for everyone.
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For more information contact:
Myriam Fallon, myriam@sunriseproject.org, +1.708.546.9001
Pictures from recent climate protests against Vanguard can be found here.