Vanguard, a major player in index funds, has significantly reduced its support for shareholder resolutions centered around environmental, social, and governance (ESG) concerns, as reported by Reuters on August 28. The company reported that during the 2023 proxy season, it only backed 2% of ESG proposals in US company meetings, a notable decrease from the 12% it supported the previous year. This decline comes as a record number of ESG proposals were presented for voting, totaling 359 compared to 290 the year before. Vanguard pointed out that many of these proposals went beyond seeking disclosure and instead aimed for concrete actions, even changes in company strategies. Notably, 150 proposals pertained to environmental issues, often focusing on greenhouse gas emission targets and climate lobbying, while 274 proposals addressed social matters like racial equity and worker safety.

This drop in support aligns with a similar trend at BlackRock [BLK:US], the world’s largest money manager, which backed only about 7% of ESG proposals in the past year, down from 22% the prior year. Despite the decrease in support, Vanguard stated that its approach to evaluating proposals remains consistent, focusing on financially material risks and giving companies latitude in implementation.

Sources:

https://www.reuters.com/sustainability/boards-policy-regulation/vanguard-joins-blackrock-cuts-support-shareholder-items-climate-social-issues-2023-08-28/

https://www.theepochtimes.com/article/vanguard-joins-blackrock-to-cut-back-support-for-shareholders-esg-proposals-5482478