Vanguard Climate-Change Dismissal

Quietly, without fanfare, the Vanguard Group has become one of the most powerful forces in Corporate America. The mutual fund company has $3.6 trillion in its mutual and exchange-traded funds—greater than the national net worth of India or Brazil. Look at the top owners of any blue-chip company, and chances are Vanguard is No. 1 or No. 2. That gives it tremendous influence. When Vanguard talks, CEOs listen. The money manager especially can flex its muscles during proxy season, when shareholders of companies vote on proposals to change corporate policies. But when it comes to proposals related to climate change, Vanguard has chosen the sidelines. According to proxy-tracking firm Fund Votes, Vanguard didn’t vote in favor of a single climate-related shareholder proposal in 2015. And since 69% of Vanguard’s assets are in index funds, it can’t opt to divest the stock if it deems a company’s policies objectionable. DFA, a similar passive shop, voted in favor of 38% of environmental resolutions last year. Actively managed shops such as Allianz, which includes Pimco, have voted 81% in favor of climate resolutions in the past year; Wells Fargo has a notable 77%.

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