Vanguard is the second-largest asset manager in the world, commanding over $9 trillion in assets under management (AUM)*. It is one of the largest shareholders in nearly every public company in the U.S. With that immense power comes great responsibility, which Vanguard is evading – and it's trailing behind the rest of the financial industry.
Vanguard says that mitigating climate risk is a priority, but its corporate practices tell a very different story. Vanguard’s voting record, its failure to prioritize engagement with the heaviest emitters, and its pitiful number of sustainable funds reveal the truth: Vanguard is neither a safe nor a smart choice. It has over $400 billion* invested in fossil fuels (the leading cause of climate chaos) and blindly invests in projects that harm Indigenous and frontline communities.
A 2021 report showed that Vanguard could lose at least $3 trillion by 2050 if it fails to act on the climate crisis. In April 2024, As You Sow found that U.S. tech sector employees missed out on $5 billion in 401(k) gains over the last decade because of their retirement plans' exposure to fossil fuels.
Yet Vanguard is falling further and further behind. For example, its environmental, social, and governance (ESG) funds represent only 0.36%* of its total AUM. Across the board, its climate actions lag far behind even slow-moving peers like BlackRock and State Street.
*Figures correct as of December 2023
Vanguard uses its opaque corporate structure to avoid responsibility for its impact. Vanguard claims that its customers own the company, but in reality, that just means the firm isn’t accountable to anyone outside its own leadership. It has enormous economic influence over nearly all the companies making the climate crisis worse. Vanguard has the power to stop financing fossil fuel expansion, starting with coal.
Vanguard needs bold leadership to dodge the most dangerous iceberg the world has ever seen. Is anyone steering the ship?
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