Since its defection from the Net Zero Asset Managers initiative, Vanguard has faced a wave of indignation from climate activists. The firm has tried to reassure stakeholders that it still cares about the climate, and promised to “keep investors informed of our approach through thoughtful insights such as our climate research.” The firm also said it intends to engage with portfolio companies and policymakers, and will continue to provide stewardship reports and regular climate reports.
But such statements seem at odds with Vanguard’s record on climate finance. It committed a smaller share of its managed funds to net zero than any other NZAMi member, with about 96% of its business ignoring emissions goals.
For now, though, Vanguard’s decision to walk out of the net-zero alliance has been rewarded by Republicans, with lawmakers in Texas excluding the firm from an interrogation centered on ESG investing strategies. Executives from BlackRock, NZAMi’s largest member and the world’s biggest asset manager, were summoned to testify.
And no matter the legal risks, Wall Street firms suspected of “ESG collusion” stand to lose business in Republican states. BlackRock has already had contracts withdrawn, with Florida and Texas proving particularly hostile to the firm’s stated commitment to ESG.
The net-zero coalition that Vanguard left has acknowledged that members face a challenging political and regulatory environment, but said there’s no evidence the alliance is about to “splinter.”
Each member has “to act within their own fiduciary duty, but I think most will stay,” said Kirsten Snow Spalding, vice president of the Ceres Investor Network, a founding partner of the NZAMi.
“Vanguard is acting politically,” she said. But its defection won’t prompt other members “to leave en masse.” In fact, the coalition is being approached by asset managers who are now interested in joining the group, she said.
--With assistance from Saijel Kishan.
This article was provided by Bloomberg News.