The global asset manager has for some time now been at the centre of a media campaign run by an organisation named Vanguard SOS, which, as outlined on its website, is dedicated to “pushing Vanguard to chart a new course away from climate catastrophe and towards truly sustainable and responsible investing”.
Now a new television and digital ad is running in the US aimed to warn Vanguard’s customers and employees of the risk that climate change poses to their retirement futures. The ad also raises concerns about Vanguard’s alleged association with climate deniers, accusing the company of taking “marching orders” from these figures.
“Many of Vanguard’s own clients have demanded meaningful climate action, raising concerns about a breach of fiduciary duty,” it alleged.
“Vanguard describes itself as ‘owned’ by its investors, yet maintains an opaque management structure and does not hold regular shareholder meetings, giving investors little to no meaningful avenue to influence Vanguard’s decision making.”
The campaign was first launched in 2022 to encourage Vanguard to engage in more sustainable investments. It describes itself as a global network of civil society organisations, social movements, and financial experts.
Vanguard Australia’s website states that many of its active fund managers explicitly consider ESG factors in their investment process.
“We develop products that allow investors to avoid exposure to companies that are not aligned with their values, or to mitigate certain ESG risks,” it stated.
In July, the Australian Securities and Investments Commission (ASIC) commenced civil penalty proceedings in the Federal Court against Vanguard Investment Australia over allegations of greenwashing.
The regulator accused Vanguard of allegedly misleading conduct concerning claims made about certain ESG exclusionary screens applied to investments in the Vanguard Ethically Conscious Global Aggregate Bond Index Fund (Hedged).
ASIC alleged that Vanguard made false and misleading statements and engaged in conduct liable to mislead the public in representing that all securities in the fund were screened against certain ESG criteria.
In a separate matter from December 2022, Vanguard received three infringement notices over alleged greenwashing, totalling $39,960. ASIC was concerned the product disclosure statements for the Vanguard International Shares Select Exclusion Index Fund might have been liable to misleading the public by overstating an exclusion, otherwise known as an investment screen, claiming to prevent investment in companies involved in significant tobacco sales.
The Vanguard funds were structured to exclude certain investments in tobacco, however, while this screen applied to exclude manufacturers of cigarettes and other tobacco products, it did not exclude companies involved in the sale of tobacco products.