Why Did Vanguard Backs Down From ESG Investing?

Vanguard is one of the three largest asset managers worldwide. It announced Wednesday that it would end its membership in the Net Zero Asset Managers Initiative. This announcement came a week after 13 state attorneys general and Consumers’ Research requested that the Federal Energy Regulatory Commission examine Vanguard’s request for stock ownership of energy companies.

Will Hild (executive Director of Consumers’ Research) tweeted that Vanguard had collapsed less than a week after he asked the Federal Energy Regulatory Commission not to allow Vanguard to purchase shares in publicly traded utility companies. We’re still winning

Hild stated that the motions for interference asked FERC to not allow concentration power to affect the grid. A Consumer Research brief highlights this concern.

More alarming to Consumers’ Research and hopefully the Commission is the fact that the Big Three (Vanguard BlackRock and State Street Advisors and State Street Advisors respectively) have used their combined market power to shape American energy policy.

In the past few years, the Big Three have developed a comprehensive engagement strategy as well as proxy voting strategies to ensure utility companies adhere to decarbonization goals.

These three major players are members of the organization and have pledged to accelerate the transition towards global net zero emissions. They will “implement a clear engagement strategy that aligns [NZAM’s] ambition for all assets under management to reach net zero emission by 2050 or earlier.”

FERC’s mission is to provide reliable and safe energy at an affordable price to American consumers. Their future investments in public utilities will not affect electricity rates, they guarantee this.

Signatories to Net Zero’s Asset Managers Commitment agree to take many actions to ensure ESG-investing strategies mirror.

Vanguard also stated that they would set an interim goal to achieve net zero emissions by 2050 or earlier. They also said that they will increase that percentage with money from other investors until they reach 100% of their AUM.

Asset management firms are expected to be most concerned about their fiduciary responsibilities towards investors. Members in Net Zero groups are contrary to Vanguard’s claims to the FERC that they don’t actively manage their investments.

Hild explained more about the risks for consumers and the energy grid.

Vanguard and BlackRock Inc., asset managers (“the Big Three”) control the majority of corporate America. This includes voting securities. The Commission must review its blanket authorizations because of this level of industry concentration.

“Hild views Vanguard’s exit from Net Zero as a victory for ESG investment organizations. ”

He feels that the filings were a success. Vanguard stated that they soon realized that their entire business model could have been at risk if they continue to coordinate and drive up energy costs with other members.

Hild stated, “We’ve struck a significant blow to the anticonsumer ESG Agenda. We will continue to fight until asset managers, and banks return to their fiduciary duties and stop using the cash of other people to play politics. ”

Riley Moore is West Virginia’s State Treasurer. He agrees. Moore said that Vanguard’s announcement was “a tremendous development for American investors” and that it shows how the United States has turned the tide against “woke radicals”, who seek to force their agendas through coercive means.

Moore continued, “Investment managers should act in the best interests of their customers and the maximization of their returns, not according to artificial restrictions drawn up by a cabal of global elites. Vanguard’s decision draws a line in the sand to say they will act in the best interests of their clients, and I hope other firms follow suit.”