We are occasionally asked about Vanguard relative to the UUA Common Endowment Fund. This recent report by the independent non-profit Reveal: “Your Retirement Investments Are Probably Fueling Climate Change” explores the environmental impact of fossil fuel investments by major asset managers like Vanguard, focusing on their role in financing large-scale fossil fuel projects known as “carbon bombs.”
Through investigative reporting, Reveal examines how individual investment funds contribute to climate change and details grassroots efforts, such as protests and campaigns, to pressure financial institutions to divest from fossil fuels and adopt climate-friendly practices.
In their research Reveal finds the following practices at Vanguard
Financing Fossil Fuel Projects: Vanguard is identified as a significant financier of fossil fuel companies, contributing billions of dollars to large-scale projects like the Mountain Valley Pipeline, which critics label as “carbon bombs” due to their potential environmental impact. The company is noted as the largest investor in fossil fuels for the second consecutive year, heavily supporting projects that environmentalists argue worsen climate change.
Lack of Climate Action: Despite initially joining the Net Zero Asset Managers Initiative, a pledge to align investments with net zero carbon emissions goals, Vanguard withdrew, signaling a retreat from active climate risk mitigation. Environmental activists view this as capitulating to political and industry pressure, undermining efforts to transition to sustainable investments.
Inadequate Proxy Voting on Environmental Issues: Vanguard has been criticized for voting against most shareholder resolutions that call for more aggressive corporate climate actions. Among the largest asset managers, Vanguard ranked last in supporting environmental resolutions.
Misalignment with Investor Values: Vanguard’s focus on offering broad market index funds has been accused of ignoring climate risks in its portfolio, leading to potential breaches of fiduciary duties by not adequately addressing long-term financial risks associated with climate change.