Under pressure from fossil fuel interests, Vanguard decides climate change may not be a problem after all

Vanguard announced earlier this week that he was leaving the Net Zero Asset Managers initiative, a nascent industry attempt to self-regulate its carbon emissions. His departure reinforces the need for government oversight of climate risks in investments.

Absent legal, financial or professional repercussions, industry self-regulation is often little more than a front for members to say they are doing something, anything.

This is not to denigrate the work done by the Net Zero Asset Managers initiative, which was created two years ago and seeks to bring assets under management to net zero carbon by 2050, preferably sooner. But Vanguard’s about-face – just over a year ago – shows that voluntary associations with non-binding commitments without financial or legal repercussions are not the tool we need to get to net zero d. 2050 or before.

Why did Vanguard leave? The fund’s management apparently deflated because a few state attorneys general asked the Federal Energy Regulatory Commission to revoke Vanguard’s ability to buy shares in U.S. utilities, citing NZAM membership as the reason. . (You can guess which party the attorneys general belong to.)

Of course, Vanguard wouldn’t comply, instead posting an incredibly innocuous message that’s pretty informative if you squint hard enough. A few lines stand out:

Vanguard has taken steps to understand and manage this risk [climate change] to investor returns.

That’s fine, I guess, but totally unfounded. Joining NZAM, while not perfect, was at least a concrete sign that Vanguard understood the problem and planned to do something about the risk that carbon emissions posed to its customers’ money.

So what is Vanguard doing now? Lots of chatter. His statement on his “approach to climate change” does not contain a single measurable reference, just meaningless and unmeasurable aspirations. Ultimate flexibility, zero liability.


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