Thursday 8 December 2022

Vanguard quits net zero effort

One of the world’s largest mutual fund managers, Vanguard Group, is pulling out of an industry initiative focused on fighting climate change.

Its decision has been seen as a blow to efforts in moving the financial sector away from carbon-intensive investments.

Vanguard has $7.1 trillion (£5.8tn) worth of assets under management – making it second only to BlackRock in being the world’s largest money managing firm.

The Net Zero Asset Managers (NZAM) initiative saw all members commit to net zero by 2050 – but its choice to leave was due to “confusion about the views of individual investment firms.”

Despite this, the company claims the move “will not affect our commitment to helping our investors navigate the risks that climate change can pose to their long-term returns.”

BlackRock has affirmed the company will remain part of NZAM, whilst Vanguard claims it conflicts with its independence.

NZAM Founding Partner Kirsten Snow Spalding commented: “It is unfortunate that political pressure is impacting this crucial economic imperative and attempting to block companies from effectively managing risks – a crucial part of their fiduciary duty.”

Vanguard will continue to offer products that are environmental, social and governance or net zero-based if investors want them, it said.