Vanguard has withdrawn from a major climate alliance: the Net Zero Asset Managers Initiative (NZAM). By leaving this alliance, Vanguard has absolved itself of previous commitments to support the planet’s transition to global net zero emissions.

By withdrawing from the alliance, Vanguard has also avoided speaking out about its ESG policies in a Senate hearing. The Texas Senate Committee had leaders from Vanguard, State Street and Blackrock scheduled to appear in court to answer questions about their ESG policies five days ago.

After Vanguard withdrew from the NZAM, Republican state senator Bryan Hughes stated the committee was “encouraged” by this development and excused Vanguard from the hearing. Republicans have continuously pressured asset managers to re-evaluate their strategies with regard to ESG. Vanguard has apparently left this climate alliance to “provide clarity to investors”.

In their official statement, Vanguard explains that their withdrawal from NZAM “...will not affect our commitment to helping our investors navigate the risks that climate change can pose to their long-term returns”. This statement ultimately frames climate “risk” as one that primarily endangers returns, rather than the wellbeing of the environment or human beings (Vanguard customers or not). 

Kirsten Snow Spalding, VP of the Ceres Investor Network, remarked in a statement that “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.” This statement implies she believes that Vanguard’s departure was due to Republican pressure and not “clarity for stakeholders” as cited by Vanguard, and that by withdrawing from NZAM, Vanguard had been forfeiting its duty to responsibly manage risk, not fulfilling it.

According to Reuters, Blackrock and other Vanguard competitors have “taken the opposite stand and said their NZAM participation does not conflict with their independence.”