Vanguard, one of the primary asset managers, withdrew from the largest climate change alliance after facing increasing scrutiny on its hostility to the fossil fuel industry.
Vanguard made the decision after a “considerable period of review.” The asset manager said its decision would “will help provide the clarity our investors desire” about Vanguard’s management of passive index funds and the alleged financial risks of climate change.
Vanguard said that the net-zero alliance “can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms.”
The financial giant has been one of the leaders in the Environment, Social, and Governance (ESG) investing scheme. ESG investing is the latest vector by which passive index fund managers such as BlackRock, Vanguard, and State Street, can pressure publicly traded corporations to adopt climate change policies, diversity requirements, and other leftist policies they would otherwise not adopt.
Kristen Snow Spalding, vice president of the Ceres Investing Network, a founding partner of the Net Zero Managers movement, blamed increased political pressure.
“It is unfortunate that political pressure is impacting this crucial economic imperative and attempting to block companies from effectively managing risks — a crucial part of their fiduciary duty,” Spalding said.
Will Hild, the executive director of Consumers’ Research, said in a statement:
Vanguard’s departure from membership in the Net Zero Alliance proves what we’ve been saying from the beginning, this is a conspiracy against the consumer. Soon after we filed to intervene in their authorization renewal before the FERC, Vanguard realized their entire business model could be at stake if they didn’t stop coordinating with other members to drive up energy costs. We’ve struck a serious blow to the anti-consumer ESG agenda and we are going to keep fighting until these asset managers and banks get back to fulfilling their fiduciary duties and stop playing politics with other people’s money.
Vanguard’s departure follows as 13 attorneys general and Consumers’ Research file two motions to the Federal Election Regulatory Commission (FERC) to stop Vanguard from purchasing shares in publicly traded utilities.
Hild noted in his motion to intervene that although BlackRock is the “most “notorious spear carrier” in its corporate climate change activism, Vanguard also played an instrumental role in advancing climate change policies on a corporate level:
In publications on its website, Vanguard details its “important role” in promoting “meaningful progress across both [its] actively managed and index-based products” such that portfolio companies adopt its climate goals.15 To be sure, it is not the case that Vanguard pursues its environmental agenda only through special “ESG” investment vehicles, while passively managing its other funds. Rather, according to Vanguard, even those funds “without explicit ESG mandates [] nonetheless align to net zero [carbon] objectives because of the existing philosophy and process used by the investment managers.”16
Hild added, “Even supposedly passive index funds are managed by Vanguard’s “investment stewardship teams” that pressure portfolio companies to adopt “emission reduction goals.”
Sean Moran is a policy reporter for Breitbart News. Follow him on Twitter @SeanMoran3.
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