Vanguard exits climate group

Fund giant Vanguard is pulling out of the Net Zero Asset Managers (NZAM) initiative, citing the conflict with the firm’s role as a provider of index funds.

In a statement, the firm announced that it has decided to withdraw from the NZAM, an industry initiative that was launched in December 2020 with 30 founding members and a commitment to working toward net zero goals by 2050.

Since then, the group has grown to 291 asset managers, representing US$66 trillion in AUM (up from US$9 trillion in 2020) with Vanguard joining in 2021. But now Vanguard has decided to step away from the global industry group.

“Such industry initiatives can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms,” Vanguard said. “That has been the case in this instance, particularly regarding the applicability of net zero approaches to the broadly diversified index funds favored by many Vanguard investors.”

The firm said that it decided to pull out of the group so that it can “provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks — and to make clear that Vanguard speaks independently on matters of importance to our investors.”

Vanguard said that it will continue to help investors navigate the risks posed by climate change to long-term returns, and will continue to publicly report on its efforts to deal with climate risk.

James Langton

James is a senior reporter for Advisor.ca and its sister publication, Investment Executive. He has been reporting on regulation, securities law, industry news and more since 1994.