Written by Eve Gutman and Nancy Treviño
No matter where we’re from, what we look like, or how we pray, we all want to build a life in a safe climate and trust that we will be able to support our loved ones. But, a small group of Republican state attorneys general are playing with our futures by attacking investors doing any crumb of sustainable investing, just to score political points in their next elections.
A recent settlement between some of these politicians and Vanguard, the global asset manager based here in Chester County, is just one in a series of examples of how Vanguard has succumbed to their political ploys. On Feb. 26 we learned that Vanguard settled in a lawsuit where 13 state attorneys general tried to claim that Vanguard and its competitors violated antitrust law by taking small steps on sustainable investing.
The settlement agreement contains a list of actions that Vanguard had already said it would do, but the binding nature of this settlement is different from Vanguard’s voluntary, reversible positions. As a representative for the Iowa attorney general said, Vanguard had already made some of the changes outlined in the settlement agreement, but now, “those adjustments must continue and are binding.”
And this didn’t have to happen, as seen by the fact that the other investment companies in the case aren’t settling in the same way. State Street, another asset manager in the lawsuit, responded to the news by affirming that “the lawsuit remains baseless and without merit.”
Whatever some politicians say, they cannot change the reality that climate change is a profound and systemic economic risk. The carbon pollution created by the burning of coal, oil, and gas is making storms and other extreme weather more brutal, taking lives and cutting into livelihoods. By investing over $180 billion in fossil fuel expansion projects, Vanguard is threatening its customers’ savings – not to mention all of our wellbeing. As concerned citizens working for a better future, we cannot accept this.
Vanguard’s claims that what matters most is “giving our investors the best chance for investment success” will ring hollow until it actually invests in a stable and prosperous future. As a start, Vanguard should offer a fossil fuel-free target date fund, give its sustainable investment products more competitive and accessible expense ratios, and meet with representatives of Vanguard S.O.S., the international campaign calling on Vanguard to invest sustainably. CEO Salim Ramji, CIO Greg Davis, and other corporate leaders have the responsibility to rise to the moment and steer the asset manager towards investing in a safe and healthy future.
For all Vanguard customers, this settlement underscores Vanguard’s chasm between what it claims about investing in its clients’ best interests and what it actually does.
Asset managers have a fiduciary duty to manage risks that’d make a material impact on their customers’ investments, like climate change. When that duty isn’t being met, clients would be wise to reconsider where they invest. More and more customers are seeing that Vanguard is on a reckless course and moving their money out of the asset manager. Former customers concerned about Vanguard’s inaction on climate change have moved more than $57 million out of the asset manager and that number will keep growing.
READ: Pennsylvania Must Act to Limit Greenhouse Gases, Lawyers Argue
In a moment when we need the largest investors and funders of fossil fuels to take action for a safe and healthy future, last month’s news shows us once again how Vanguard will cave to the flashiest pressure. Vanguard could choose to be a leader in providing its customers with more sustainable investment options, but instead chooses to settle politically-motivated lawsuits that seek to protect fossil fuel interests over our wellbeing.
We will continue to push back with our multi-faith, intergenerational campaign and highlight how Vanguard must start truly investing in the best interest of all of its tens of millions of customers.
Eve Gutman is the Communications and Research Manager at Earth Quaker Action Team, a Philadelphia-based direct action campaigning group inspired by Quaker values and a member of the Vanguard S.O.S. campaign.
Nancy Treviño is a Campaign Manager at Stop the Money Pipeline, a national coalition of over 200 organizations holding the financial backers of climate chaos accountable and a member of the Vanguard S.O.S. campaign.
