Vanguard Invests in Social Harm
A new report by Action Center on Race & the Economy (ACRE) reveals how Vanguard, the world’s second-largest asset management institution, has supported the fossil fuel industry and perpetuated social harm. Findings show that Vanguard’s ESG qualifications are insufficient and pose an active risk to vulnerable communities. About a third of Vanguard’s ESG funds -- approximately $6 billion -- are invested in major polluters, like Dow Chemical and Amazon. Meaning, funding intended for investment in a socially just manner is instead being funneled straight into extractive and harmful industries.
Oceana: Amazon's enormous and rapidly growing plastic pollution problem, December 21, 2021.
Why This Matters
Vanguard’s harmful asset management strategies highlight the need for increased corporate transparency. According to the International Energy Agency (IEA), carbon emissions hit the highest level in human history in 2021. Over 71% of these emissions are attributed to just 100 major companies. Without more stringent standards for ESG investment, Vanguard can continue funding corporate greenwashing and the climate crisis.
Now This: Sheldon Whitehouse on Greenwashing and Fossil Fuel Industry, May 14, 2021.
Following the publication of a study about the failure of corporations to act on their climate promises, the US Security and Exchange Commission (SEC) took a step toward improving climate risk disclosure. The SEC proposed new rules that would increase corporate transparency about climate for investors.
Still, time will tell whether the recently-approved disclosure mandate will be enough. In the report, ACRE calls for a "three-pronged approach” to the transition away from fossil fuel funding: disclose, divest, and finally, repair. Vanguard’s ownership stake in over 10,000 corporations and over $8 trillion in assets under management gives it the power to set industry standards for green and socially-just investment -- for better or for worse.
CNBC: SEC chief Gary Gensler on agency's proposed changes to climate disclosures, March 22, 2022.
SEC: ESG Investing - Office Hours with Gary Gensler, March 3, 2022.
NBC: Are Major Companies Living Up To Their Net-Zero Pledges To Combat Climate Change?, February 10, 2022.