Walden Asset Management to challenge Vanguard’s climate proxy voting policy at AGM

Investment giant faces pressure over climate track record

The shareholders of Vanguard, with $3.8 trillion under management, will have to vote on a resolution proposed by Walden Asset Management, asking for a review of the fund’s proxy voting policies and practices.
The AGM of the mutual fund will take place later this year on November 15.
Walden wants Vanguard to issue a report on the matter (“prepared at reasonable price and omitting proprietary information”) on the basis that ESG factors should be addressed as part of the fund’s fiduciary duty, Walden stated.
Walden’s proposal highlights Vanguard’s membership of the Principles for Responsible Investment, and the stance on long-termism of the firm’s CEO, Bill McNabb, saying the fund should “review how climate change impacts our economy, portfolio companies and fund holdings”.
McNabb will be succeeded by Tim Buckley, Vanguard’s chief investment officer, on January 1, 2018.
Walden noted: “Vanguard funds’ publicly-reported proxy voting records reveal consistent votes against all climate-related resolutions (except the few supported by management), such as request for enhanced disclosure or adoption of greenhouse reduction goals.”Reputational risks as well as protection of long-term shareholder value were reasons given by Walden for its resolution.
Vanguard’s trustees recommended shareholders vote against the resolution, stating that the information requested is already publicly available, and “duplicative reporting…would be an expense to the funds’ shareholders”.
The trustees argued that “direct, ongoing engagement with companies is often more effective than a singular vote” rather than “focusing narrowly on the funds’ proxy voting results”.
They added that apart from Vanguard’s commitment to the PRI, the fund is an active participant in the Investor Advisory Group of the Sustainability Accounting Standards Board.
In a similar shareholder resolution submitted in March 2017, Zevin Asset Management called for T. Rowe Price to review its climate change-related proxy voting policies and practices, which were seen by Zevin as incongruent with T. Rowe’s ESG investing approach, and an overlooked key risk.