Vanguard's newly-published, nothing-new post on climate change

At 11 p.m. eastern on April 20, 2022, Vanguard quietly published a blogpost on its website outlining the firm’s current approach to climate change. The post contains no new commitments or details on Vanguard’s part. Perhaps the only truly noteworthy aspect of this post is its timing — Vanguard published it a mere 14 hours after the launch of the Vanguard S.O.S. campaign.

While publicizing climate efforts is always a good thing for accountability, the post lacks both substance and specifics. So, following in the footsteps of shareholder advocacy organization As You Sow, the Vanguard S.O.S. campaign decided to add a few necessary edits to Vanguard’s post.

A screenshot of the top of Vanguard website. The image around the title at the top has been replaced with a forest on fire. The title "Vanguard's approach to climate change" has been circled in red with "Overdue!!" written above in red. The original text underneath reads "Climate change will have far-reaching consequences that will shape future trends in economics, financial markets, politics, and society. "climate change" through "consequences" has been underlined in red. A red arrow points to a comment that reads "Oh, you picked up on that, did you? This has been true for YEARS. That's why we launched Vanguard S.O.S."

A screenshot of the Vanguard post on climate change, with red edits. The original text reads: "As an investment manager and the steward of our clients’ assets, Vanguard is duty bound to maximize total return for investors and to ensure portfolio companies are taking appropriate steps to mitigate material risks to those returns. Vanguard considers climate change—and the evolving global policy responses required to mitigate its impact—to be a material and fundamental risk to companies and to their shareholders’ long-term financial success. Accordingly, we have an important role to play in engaging and encouraging real progress by portfolio companies to mitigate the potential consequences of climate change. This is our fiduciary duty." The first edit underlines "Vanguard considers climate change" with an arrow to the added comment: "As does the majority of the financial community... Vanguard is embarrassingly late to the game on acknowledging the physical and transition risks of climate change, let alone beginning to adequately manage those risks for clients." "Engaging and encouraging" is circled with an arrow pointing to the comment "No accountability!!" underlined twice. "real progress" is also underlined with the an arrow pointing to the comment "Vanguard needs to lay out a clear, time-bound escalation plan for failure to provide a science-based climate transition plan."

A screenshot of Vanguard's post on climate change with added red edits. The original text reads "Some of our efforts to inform and safeguard investors on climate change include: Research by Vanguard economists to quantify the potential impact of climate change on global gross domestic product (GDP). Direct engagement with the boards and management of companies held in our funds regarding climate risk oversight, mitigation, and disclosure on progress against their stated strategies. " The first bullet point on research is circled and a red arrow points to the comment "This is a start but Vanguard must also demonstrate it understands the financial implications for its own clients and their respective holdings. It should be providing more data which adequately discloses climate risks and climate alignment." The second point on direct engagement is underlined with an arrow pointing to the comment: "Tea and biscuit engagement is not sufficient. Vanguard has historically been among the bottom of asset managers in supporting climate-related shareholder resolutions and voting against directors."

A screenshot of Vanguard's post on climate change with added red edits. The original text reads: "Investment products that can help investors manage certain climate-related risks and opportunities, whether by enabling them to exclude companies involved in the fossil fuel value chain or by investing in those better poised for a low-carbon future. Participation in market-based efforts that seek to facilitate an effective transition to a low-carbon economy and mitigate risk to investors." "Investment produces is circled and an arrow points to the comment "This should be a DEFAULT offering — not niche. ESG funds make up less than 1% of VG's total AUM." "Exclude companies" is underlines and a arrow points to the comment: "Vanguard MUST implement a comprehensive coal exit policy that applies to all its funds to avoid a future with [underlined] billions is stranded assets." The last edit boxes "market-based efforts" and the comment reads: "offsets, carbon removals, and nature-based solutions CANNOT stand in place of [underlined:] necessary absolute emission reductions."

A screenshot of Vanguard's post on climate change with added red edits. The original text reads: A commitment to working with global policymakers and regulators in this arena on behalf of long-term investors. A set of corporate goals and actions to make progress toward reducing Vanguard’s own carbon emissions and reaching carbon neutrality as a company by 2025." "policymakers and regulators" is underlined and a red arrow points to a comment above reading "Vanguard should be publicly and enthusiastically supporting regulatory efforts, including climate disclosure rules, which increase the transparency, availability, and consistency of climate risk reporting." "A set of corporate goals" is boxed in red with an accompanying comment "Still waiting on those interim emissions reductions targets to be publicized..." "Vanguard's own carbon emissions" is underlined in red with an arrow pointing to the final comment" Nice, but essentially meaningless stacked up against the BILLIONS Vanguard funnels into the [underlined:] highest-polluting sectors of the economy."

Resources used as the basis of our critique:

Intergovernmental Panel on Climate Change report press release
Majority Action — Climate in the Boardroom report
Institute for Energy Economics and Financial Analysis report on Vanguard
Global Coal Exit List — Investor report
U.N. Secretary-General António Guterres statement on coal and stranded assets

Vanguard’s newly-published, nothing-new post on climate change

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