Business
Vanguard withdraws from supporting environmental and social proposals
The world's second-largest asset manager, Vanguard, did not support any of the 400 environmental or social proposals during the 2024 U.S. proxy season, marking a significant departure from previous record levels and indicating how major money managers are distancing themselves from these issues.
American asset manager Vanguard did not support any of the 400 environmental or social proposals it reviewed during the 2024 US proxy season.
In its latest report on corporate governance in the USA, Vanguard emphasized that the decline in support was not due to a change in its team's voting policy. Instead, it noted that the submitted proposals did not cover significant financial risks in any of the cases or were too regulatory. Of the 187 proposals related to corporate governance, Vanguard supported 51 that focused on shareholder rights.
Vanguard is not the only major asset manager increasingly distancing itself from environmental and social proposals. BlackRock, the world's largest asset manager with $10.6 trillion in assets under management, recently announced that it had supported only 4 percent of such proposals worldwide this year. Both companies stated that many of this year's proposals demanded actions that the companies had already implemented.
In addition, both Vanguard and BlackRock have reduced or completely ended their involvement in groups dedicated to fighting climate change. This comes amidst heavy criticism from Republicans, who accuse the companies of promoting "woke capitalism" through their large shareholdings. Vanguard stated that its "no" votes also included 40 "counter-motions" aimed at preventing companies from engaging with climate and diversity issues.
The Decline in Support for Environmental and Social Proposals at Vanguard Reflects a Broader Trend Indicating a General Decline from Record Levels in 2021. According to Data from ISS Corporate, Median Support for Environmental and Social Proposals at Companies in the Russell 3000 Index was 21 Percent and 18 Percent, Respectively, This Year.
Vanguard's report is absolutely astonishing," commented Tim Smith, Senior Policy Advisor at the Interfaith Center on Corporate Responsibility, an organization that represents religious institutions that file shareholder proposals. "It is both alarming and very surprising. Vanguard is essentially withdrawing from the game instead of being a responsible trustee and truly examining where there is a connection between shareholder value and the issues addressed in the proposals.
