Vanguard CEO McNabb to co-chair new high-level investor-corporate initiative

Head of giant fund manager to join board of the CEO Force for Good

Vanguard Chairman and Chief Executive Bill McNabb has joined the board of the CEO Force for Good (CECP), the US corporate sustainability project.

McNabb, whose company has $4.5trn in assets and which has been upping its game in terms of climate change and governance recently, will also serve as co-chair of the organisation’s new Strategic Investor Initiative (SII).

The CECP – which was founded in 1999 by Hollywood legend Paul Newman — is in the process of appointing McNabb’s co-chair to help lead SII. CECP is a CEO-led coalition that “believes that a company’s social strategy – how it engages with key stakeholders including employees, communities, investors, and customers – determines company success”.

SII is headed by Mark Tulay, the sustainability veteran who was formerly COO for the Global Initiative for Sustainability Ratings (GISR). Tulay is also the Founder and CEO of Sustainability Risk Advisors.

SII is the coalition’s platform, backed by both CEOs and investors, that is designed to “change the conversation between CEOs and their boards, directors, and investors”.

The SII Advisory Board members include senior figures from BlackRock, Canada’s CDPQ, Hermes, NASDAQ, PWC, the New York State Office of the Comptroller, Walmart, Thomson Reuters and CalSTRS – to name a few.McNabb said in a statement: “For too long, companies have sacrificed long-term value creation to generate short-term results, which erodes the sustainability strategic investors seek. It’s through the groundbreaking efforts of the Strategic Investor Initiative that companies and investors can change how businesses plan and act.”

CECP will hold its second Investor Forum, where CEOs will present their long-term, strategic visions for their companies to investors representing more than $25trn in assets under management, on September 19. It features presentations from senior executives at Aetna, Prudential Financial and Allstate, among others.

Late last month McNabb wrote an open letter to the directors of public companies worldwide, outlining the four pillars it thinks of when evaluating corporate governance practices. They are: (1) The board; (2) Governance structures; (3) Appropriate compensation; (4) Risk oversight.

He also highlighted gender diversity and climate risk, saying Vanguard’s view is “based on the economic bottom line”. He went on: “As significant long-term owners of many companies in industries vulnerable to climate risk, Vanguard investors have substantial value at stake.”