Climate change advocates are continuing protests against Vanguard for being one of the biggest investors in fossil fuel and demanding that the firm begin divesting itself of investments that are helping to create harmful climate change.
Vanguard, along with Blackrock and State Street Global Advisors, were the top three offenders when it comes to not taking meaningful action to curb climate change, according to this year’s “The Asset Managers Fueling Climate Chaos,” published by the advocacy group Reclaim Finance.
Marking Earth Day, celebrated April 22, protests against Vanguard took place in several locations worldwide, including the United States. The action was part of an ongoing effort by a coalition of environmental groups to force Vanguard and other asset managers to divest themselves from fossil fuel companies, Myriam Fallon, senior communications campaigner for The Sunrise Project, a research and advocacy organization, said in an email.
“Vanguard must commit to decarbonize its entire portfolio by pushing the highest carbon emitters to design and implement a just plan to align their business model to a 1.5 degree future,” EQAT (Earth Quaker Action Team) campaign director Eileen Flanagan said during the protest in Pennsylvania. “Scientists agree we are in a climate emergency (and) Vanguard is running out of time.”
A Vanguard spokesperson said in an email, "We consider climate change to be a fundamental risk to many companies and their shareholders’ long-term financial success. As an investment manager and steward of our clients’ assets, it’s our fiduciary duty to ensure investors are aware of material risks, and that portfolio companies are taking the appropriate steps to manage and mitigate those risks on behalf of their shareholders.
"We are addressing this important risk by engaging with the companies held in our funds on their climate risk oversight, mitigation, and disclosures; through thoughtful investment products that help investors manage certain climate-related risks and opportunities; and, through engagement with policymakers, industry regulators, and aligned organizations."
The Earth Day protests were part of an international escalation against Vanguard by more than 100 organizations representing more than 6 million people. The advocates also sent a letter to Vanguard CEO Tim Buckley voicing the organizations’ demands. According to The Sunrise Project, Vanguard had more than $300 billion in fossil fuel exposure as of the end of 2021 and increased its coal investments. In addition, the firm was invested in some of the worst new fossil fuel projects that are planned or in development, The Sunrise Project said.
Vanguard was at the center of recent protests, but other large asset managers also are at fault, Lara Cuvelier, Reclaim Finance’s head of the sustainable investments campaign, said in an interview. BlackRock and State Street Global Advisors also are heavily invested in fossil fuels and, along with Vanguard, make up the three largest asset managers by the number of shareholders and bond holders. Other companies have not drawn as much ire from the advocacy groups because they are taking some actions to divest themselves of fossil fuel holdings or are working with the companies they are invested in to reduce a little of the impact of climate change.
For instance, “BlackRock has been taking steps to address the climate crisis and its contributions to it,” Fallon said in an email.
If advocacy groups can force asset managers to act, an impact on climate change can be achieved, Cuvelier said. “If the financial sector and government policy makers get serious, it is not too late. This is the moment in the year (when corporate boards and shareholders are meeting) that asset managers have influence. We need to push asset managers to stop supporting expansion of fossil fuel projects and force them to implement sanctions against companies that are facilitating climate change.”