ESG Clarity’s interview with Vanguard’s John Galloway, global head of investment stewardship, and Matt Piro, global head of ESG strategy, reported in this InvestmentNews article, reaffirms the investor’s commitment to financial returns for its reportedly 30 million global investors in lieu of an ESG-first approach. Consistent with past pronouncements, Galloway and Piro indicate Vanguard reviews and acts on shareholder proposals on a case-by-case basis after evaluating each proposal’s “asks” against company-specific facts and circumstances.
Although ESG considerations may play into its voting decision-making, Vanguard does not view achievement of ESG objectives as a goal in itself; rather, ESG issues, along with other risk factors, may be taken into account as a function of optimal shareholder returns. Consistent with that approach, Vanguard also does not view itself as properly indirectly regulating societal problems like climate change through its size and influence:
“We have no agenda beyond shareholder return,” Galloway says. “That frustrates those who say, ‘How can you say that? Climate change today is an essential crisis, and everyone should be doing everything they can.’ There’s a frustration with lack of governmental action, particularly in the States, and therefore a desire for other entities to step in and do something. We don’t believe that’s the role we can or should play. We are not a solution to a societal challenge that needs governmental action.”
While the firm has ESG-specific investment products, Galloway and Piro note they are designed specifically for investors who are seeking to invest in alignment with their personal values.
See our recent reports: “Vanguard Speaks! Racial Equity Audits, Climate Disclosure, & More!” and “Inside Scoop: Vanguard Speaks!” and additional resources on our Institutional Investors page »Vanguard.
This post first appeared in the weekly Society Alert!