Vanguard clients have released an open letter addressed to the firm’s new CEO, Salim Ramji, asking for the investment firm to commit to centring climate risk as a priority within Vanguard’s investment and engagement strategies.
The letter underscores Vanguard’s responsibility as an investor, stating: “As a fiduciary, it is your duty to steward your clients’ investments – including my investments – responsibly. Failing to do what is in your control to mitigate risks to your clients’ assets is arguably a violation of your legal obligations. As many other clients before me, I am voicing my concern of Vanguard’s failure to do this under Tim Buckley’s tenure, and my hope that as the new CEO, you will take action to help safeguard my financial future.”
Clients wrote additional notes to express the extent of their concern, with many stating that they would withdraw money unless the company changed course, and others citing the ways in which their investments are impacting the future and what their lives will look like in retirement, especially for their children. Clients also mentioned that they will continue to petition employers to move away from Vanguard if they don’t see changes from the financial institution.
For example, Janice Wakefield from Winston-Salem, North Carolina, wrote: “I have quite a bit of my retirement money in Vanguard mutual funds. I was surprised and concerned to just learn that Vanguard is the largest investor in fossil fuel companies and a very poor record on holding companies accountable for climate and sustainability impacts. I hope you can make the changes that will allow me to continue to have a high opinion on Vanguard funds. And changes that will mean I’m investing for the kind of world I hope to be alive to enjoy 25 years from now.”
Linda Robertson wrote: “I have retirement funds in Vanguard and am disturbed that you are invested in fossil fuels. Please give me other investment options.”
Meanwhile, Mathieu Simard simply said: “I have retirement funds in Vanguard – will remove if not addressing this issue.”
Vanguard ‘have fallen behind’ in mitigating risks for clients
Despite Vanguard’s global head of investment stewardship, John Galloway, expressing that climate change “represents a profound, fundamental risk to investors’ long-term success,” the firm came top of a list of institutional investors with investments in the fossil fuel industry, with $413bn in coal, oil and gas holdings, according to research from Urgewald published earlier this month.
Sierra Club – who published the letter to Vanguard’s CEO – said that, as one of the largest asset managers in the world, the firm should take proactive steps to mitigate these risks for their clients through proxy voting, corporate engagement, fund offerings and working with clients to shift their investment strategies. However, Vanguard “has fallen far behind in terms of managing and mitigating these risks on behalf of clients”, citing that in 2023, the firm supported a mere 2% of environmental and social resolutions.
The letter warned: “Meeting the challenges of the 21st century requires moving away from 20th century thinking about investment risk management; it requires understanding the risks that climate change poses to both individual companies and portfolios as a whole, having a strategy to manage and mitigate those risks in long-term and passively managed funds, developing a vision to navigate a set of new and evolving risks, and having a team that is eager and able to meet these challenges.”
PA Future has approached Vanguard for comment.
