Across Vanguard’s investment portfolios, there is a lot of exposure to climate risk. And customers are waking up to it.
Has this ever happened to you? You get a call or email from a customer worried about climate or the environment in general. You feel proud because Vanguard has some ESG and/or fossil free investment products. Even better, unlike a lot of your competitors, Vanguard minimizes selling ESG products that are no better than greenwash. You have options to offer this customer and you end your interaction feeling like you fulfilled their request.
But something is nagging you. You know that Vanguard doesn’t offer enough climate safe products for customers to build a complete portfolio. Moreso, you’re relieved it wasn’t a customer of a retirement plan who called, because there’s no good answer for them. Or maybe, you know that despite some moves in the right direction, Vanguard has only scratched the surface on creating climate safe products that all investors can feel good about. What do you do?
You know this well, Vanguard invests for the long-term. But for too long, the investment industry has funded fossil fuel projects, driving high but short-term returns. This is no longer sustainable. The top experts across scientific fields, including at the United Nations, agree that in order to have a fighting chance, the planet needs to cut global coal, oil and gas emissions in half by 2030.
Experts in climate science have agreed for a while now: Any continued or new investment in fossil fuels is unacceptable.
That’s why it was a positive development when Vanguard joined the Net Zero Asset Manager initiative and so disappointing when Vanguard abruptly left without even telling employees.
That’s why more action is needed now, and there is a lot that Vanguard can improve on. If you want to make a change, here is how you can make it count.
As of 2021, Vanguard had over $300 billion in fossil fuel exposure, including $104 billion invested in the twelve largest fossil fuel projects being planned or already under development around the world. According to the 2022 Global Coal Exit List, Vanguard increased its coal investments making it one of the world’s largest investors in the coal industry. Part of this is because Vanguard is such a large investor, but with great power comes great responsibility.
Vanguard also has one of the worst voting records in the industry on climate-related shareholder resolutions and holding directors accountable, trailing other large managers like BlackRock and State Street and severely lagging behind its European competitors.
We will not sugar coat it, making the changes internally to establish Vanguard as a climate leader will take time and effort. However, know that there are tangible steps you can help Vanguard take now.
Vanguard’s investments actively harm frontline and Indigenous communities across the world
Here’s a perfect example. Listen to this story that originally aired on a local radio station. This details the journey of 3 leaders from the Peruvian Amazon who had written Vanguard leadership months before looking to meet to discuss the impact Vanguard investments are having on their livelihood. Instead of welcoming them into dialogue, Vanguard leadership ignored them. What these community leaders are asking (for Vanguard to leverage its power to engage Petro Perú) is doable but admittedly will require courage to lead. We know that the majority of Vanguard assets in Petro Perú and almost any company will be passively held; We disagree that Vanguard’s hands are tied when it comes to its passive problem.
You and other Vanguard employees have the power to help Vanguard solve challenges like this and bring the company into the future by speaking up and joining together with like-minded colleagues. Doing so can be a win-win, good for Vanguard and a positive for your career.
Have ideas about how to make Vanguard a climate leader? We want to hear from you. Click here to complete an anonymous survey.
If you would like to partner with other Vanguard employees and customers who want to lead the company into a new climate-safe future, then join us at Vanguard S.O.S. You can sign up to our newsletter here or email: [email protected].