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Vanguard supported none of the 400 environmental or social shareholder proposals that it considered in the 2024 US proxy season, saying they were “overly prescriptive”, unnecessary or did not relate to material financial risks.
The $9.3tn money manager’s support for these kinds of proposals at company annual meetings has been falling sharply for three years, after peaking at more than 46 per cent support in 2021. Last year it voted in favour of 2 per cent of such proposals.
Vanguard said in its US stewardship report that the falling support “does not reflect a change in our team’s application of the funds’ voting policies. Rather it can be attributed to our assessment that, in each of these cases, the proposals did not address financially material risks . . . or were overly prescriptive.” Among 187 proposals related to governance, it backed 51 related to shareholder rights.
The world’s second-largest money manager is not alone in its dwindling support for environmental and social proposals. BlackRock, the largest at $10.6tn in assets under management, said last week that it had voted in favour of just 4 per cent of such measures worldwide.
Both firms said that this year’s proposals included a number of requests that asked for action on matters that companies had already addressed.
Vanguard and BlackRock have scaled back or quit their involvement in groups that have pledged to fight climate change, while also facing heavy criticism from Republicans who claim they are using their large shareholdings to push “woke capitalism”. Vanguard said its “no” votes had included the rejection of 40 “counterproposals” that sought to prevent companies from addressing climate and diversity issues.
Vanguard’s decision not to back environmental and social proposals has contributed to, and mirrored, a larger fall in support from record levels set in 2021. The median support for environmental and social shareholder proposals at Russell 3000 companies was 21 per cent and 18 per cent, respectively, this year, according to data from ISS-Corporate.
Vanguard’s report was “absolutely astounding”, said Tim Smith, senior policy adviser at the Interfaith Center on Corporate Responsibility, which represents religious organisations that file shareholder proposals. “I think it is both alarming and very surprising.”
“Vanguard basically is walking away from the game rather than being a responsible fiduciary and really studying where there is a link to shareholder value and issues in the resolutions,” he said.