Engagement Analysis Analysis
Stewardship Framework and Processes: Vanguard does not appear to be firmly engaging with companies on climate. It has a framework informing its climate engagement strategy, for example, it listed oversight of strategy and risk including climate risk as one of its stewardship pillars, stating it looks for companies to exhibit sound climate change risk management. The asset manager states it develops engagement objectives and tracks engagement activity and progress, and may set milestones, but details on these processes lack granularity. Vanguard appears to have a limited escalation strategy and has demonstrated escalation responses following poor climate performance but it is unclear how it related to its wider engagement program.
Climate Stewardship Actions: The asset manager’s engagements on climate issues are primarily focused around upcoming climate-related shareholder resolutions. For example, it engaged with S&P Global to discuss a Say on Climate proposal to ratify the company’s emissions reduction plan and engaged with Bank of Montreal around a shareholder proposal asking the company adopt a policy to ensure its financing activities would not contribute to new fossil fuel supplies consistent with IEA’s Net Zero Emissions scenario. However, the asset manager states it does not seek to dictate a company’s strategy. Vanguard appears to have engaged with companies on climate policy influence, engaging with Glencore about its concerns regarding clarity of the company’s lobbying activities which appeared to contradict its stated commitments. Evidence suggests Vanguard is not collaboratively engaging around climate, withdrawing from NZAM in December 2022.
Governance and Transparency: Vanguard has described its stewardship governance structure and has referenced how it assesses the effectiveness of stewardship policies and activities. It is transparent about engagements, providing numerous case studies in its stewardship reporting. Additionally, it is transparent about its voting record and has disclosed voting rationale for a sample of climate-related shareholder proposals.
Shareholder Authority and Voting: The asset manager does not appear to have used its shareholder authority to drive companies to transition on climate.
Insightia data suggests that Vanguard has overwhelmingly opposed AGM resolutions InfluenceMap categorizes as in line with the Paris Agreement, supporting 1.8% in 2019 and 10.8% in 2020. Its support slightly increased in 2021 at 28.6% but decreased in 2022 at 4.5%.