With more than 30 million investors globally looking to us to both safeguard and grow their investments, we think about risks and opportunities in the context of delivering value to investors. This attitude shapes our approach to environmental, social and governance (ESG) considerations, which is multifaceted and founded on three pillars.
Our range of ESG index funds employs exclusionary screening, meaning exposure to certain companies is prohibited, owing to their failure to meet a set of independently established ESG standards.
Financially material ESG information is measured systematically within the investment process across our range of funds. ESG risk ratings are assigned to companies and no investment opportunity is off limits.
Our index funds are long term owners of companies and we seek to positively influence corporate behavior through our investment stewardship programme, which focuses on four key principles.
Take the controversy out of your investments
Vanguard takes a thoughtful and deliberate approach to developing new products. We aim to deliver value through the quality of our funds. Vanguard advocates broadly diversified, low-cost portfolios of equities and bonds. The only difference is that with these, we aim to remove the companies that don't live up to the beliefs of our ESG investors.
Integrating ESG in Active funds
Across our active funds and index fixed income products, we incorporate the assessment of financially material ESG information in the investment research and decision-making process. The practice is most visible in our range of actively-managed funds, with different protocols for in-house and externally-managed products, as well as equity and fixed income funds.
Oversight of portfolio companies
A long-term perspective is central to our approach to stewardship. Through multiple channels we promote leading corporate governance practices, which we believe will deliver long-term value to all investors.
We advocate with groups of constituents in the market to inform and articulate our governance.
We have ongoing, direct dialogue with portfolio companies and other stakeholders about corporate governance.
We vote the Vanguard funds' proxies in support of good governance.