Vanguard assembles Sustainable Investments “super” team to align funds with climate-risk factors

Industry-leading policy innovations and new fossil-free fund exemplify Vanguard investors’ values of disciplined risk management

VALLEY FORGE, PA (October 19, 2021)—To better achieve core values and meet rising investor interest, Vanguard today introduced a 10-year plan to enhance climate risk policies, and announced the formation of a Sustainable Investments (SI) department. In addition to adjusting all funds to meet interim targets toward absolute carbon emissions reduction, the SI team will introduce new climate-aligned products for investors concerned with the long-term sustainability of their assets and the planet.

Investors are aligned with Vanguard’s time-tested principles of disciplined risk management, including known climate risk factors, and are increasingly seeking opportunities to better align their financial objectives with their personal values. There is increasing demand for funds that invest in a sustainable future, and interest in ensuring that strong returns are not achieved through long-term environmental damage.

Sustainable Investments innovation

Vanguard is proud to name Stanley Goodwin as its first Sustainability Director. Goodwin will lead the Sustainable Investments super-group of 13 experts who will advise changes to active and passive funds that prioritize the climate-risk factors facing all assets under management (AUM). The team’s initial recommendations identified key area of work that will help the company enact credible transition plans which will lead to absolute emissions reductions in line with a 1.5°C pathway. Our ultimate goal is to reach zero emissions by mid-century or sooner. Below are the first steps we will take over the next 10 years:

  • Adopt a fossil fuel exclusion policy to screen our funds
  • Expand our stewardship and engagement team by 50% and prioritize climate expertise
  • Expand engagement with companies across our portfolio to ensure each company implements credible transition plans that are on track to reach absolute emission reductions in line with a 1.5°C pathway and take into account deforestation risks
  • Use our voting power to ensure companies are actively working on those plans and are on track to hit emissions targets
  • Promote human and Indigenous rights with a policy that recognizes the rights of Indigenous peoples, applied across all extractive sectors
  • By 2030, offer ESG, fossil-free and deforestation-free funds as the default option for investors across our portfolio

The Sustainable Investments team will also develop new funds designed to ensure that investments are sustainable in the long term, beginning with a new target-date fund for young investors.

“Vanguardians of the Galaxy” target-date fund for young investors

Vanguard research shows that investors across all generations and wealth segments demonstrate a similar diligence to balancing risk and reward, and climate risk remains the greatest known risk—especially to young investors. The Vanguardians fund heeds the immediate call to action and takes stewardship to heroic new heights. Building upon decades of thought leadership and investor advocacy, Vanguard designed this fund to help young investors ensure that their portfolios are sustainable by properly accounting for future climate risk. The Vanguardians fund assembles a “dream team” of sustainable-energy commodities into one diversified, risk-managed portfolio. The fund screens out fossil fuels and commits to super-heroic shareholder engagement on climate resolutions. This target-date fund will empower young investors to build wealth in ways that are good economically and environmentally.

“Our pledge to be ‘Vanguardians of the Galaxy’ will provide conscientious clients an efficient means of accessing stable markets while employing a meticulous screening process so investor dollars are used only for good throughout the world—and, yes, throughout the galaxy,” said Stanley Goodwin, Sustainability Director of Vanguard.

For comment:
Conner Lavigne - Communications Director, Vanguard Sustainable Investments
news@investors-vanguard.com
646-661-2937

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About Vanguard
Vanguard is one of the world’s largest investment management companies. As of July 31, 2021, Vanguard managed $8.1 trillion in global assets. The firm, headquartered in Valley Forge, Pennsylvania, offers more than 418 funds to its more than 30 million investors worldwide. For more information, visit vanguard.com.