Vanguard’s Climate-Change Dismissal – Barron’s

According to proxy-tracking firm Fund Votes, Vanguard didn’t vote in favor of a single climate-related shareholder proposal in 2015. And since 69% of Vanguard’s assets are in index funds, it can’t opt to divest the stock if it deems a company’s policies objectionable. DFA, a similar passive shop, voted in favor of 38% of environmental resolutions last year. Actively managed shops such as Allianz (ticker: ALV.Germany), which includes Pimco, have voted 81% in favor of climate resolutions in the past year; Wells Fargo (WFC) has a notable 77%….

That includes the Vanguard FTSE Social Index fund (VFTX), which is supposed to factor in such issues, yet failed to support any climate-related proposals in 2015.

What’s more, Vanguard’s biggest competitor, BlackRock (BLK), which manages $4.9 trillion, $919 billion of which is in its iShares ETFs, has shifted gears on climate science. Although it too has long voted against environmental shareholder proposals, this February CEO Larry Fink stated in a letter sent to 500 CEOs that environmental factors “have real and quantifiable financial impacts” on companies’ bottom lines. BlackRock also joined the newly formed Financial Stability Board’s Task Force on Climate-Related Financial Disclosures to help develop uniform global standards of climate-risk disclosure.

Source: Vanguard’s Climate-Change Dismissal – Barron’s

One Comment Add yours

  1. I think Vanguard, unlike most funds, is owned by its fund investors. I’m not one of them, so don’t know the mechanics of voice. Maybe someone needs to create a blog or Facebook page aimed at changing voting policies at Vanguard. I would think most Vanguard investors have concerns about climate change and would like to pass on a salubrious planet to their grandchildren. I am a BlackRock shareholder and will be monitoring how they vote conforms, or doesn’t conform, to what they say. Talk is cheap and BlackRock has played that card for years.

    I’m beginning to think the biggest problem in corporate governance isn’t CEOs, who are just climbing within the 1% because they aren’t adequately monitored. The real problem is with the funds. Most people are investing through funds like Vanguard because they think professionals will do a better job of looking out for their interests. As we can see, they aren’t. Although it is difficult to make the case that funds have a fiduciary duty to vote in favor of resolutions that address climate change, maybe that day is fast approaching with each bad weather cycle. How many droughts, fires, floods or triple digit days will it take?

    Like

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