Vanguard, one of the world’s largest asset managers is withdrawing its membership from the Net Zero Asset Managers initiative (NZAM).
It was only in May that the fund manager, which has around $7 trillion in assets, was highlighting commitments it had made in line with NZAM’s goals.
However, this week, Vanguard posted a statement on its website saying it “joined the Net Zero Asset Managers initiative in 2021. Such industry initiatives can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms.
That has been the case in this instance, particularly regarding the applicability of net-zero approaches to the broadly diversified index funds favoured by many Vanguard investors.”
It explained that after a considerable period of review, “it decided to withdraw from NZAM so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks—and to make clear that Vanguard speaks independently on matters of importance to our investors.”
The development follows a year of pressure in the US from conservative groups and prominent Republicans on financial services firms to abandon ESG-related objectives.
For example, states such as Florida and Texas have introduced legislation or rules to prevent state funds from investing in companies with an ESG approach.
Notably, Vanguard’s decision comes a day after Senate Banking Committee Republicans issued a report criticising the “big three” asset managers — BlackRock, State Street and Vanguard.
NZAM, which started in 2020, last month announced its membership had grown to 291 firms, with 86 asset managers having disclosed initial net-zero targets.
Northern Trust and Alliance Bernstein are the latest additions while BlackRock has reiterated it will not follow in its rival’ s footsteps and remain part of NZAM.
