Investor giant puts more emphasis on climate risks

Source: Benjamin Hulac, E&E News reporter • Posted: Wednesday, August 16, 2017

An official at the mutual fund giant Vanguard said yesterday the company is discussing climate change with more companies than “ever before,” and he called the topic a priority.

“Vanguard has prioritized climate risk on engagement agenda, and we have discussed the topic with more companies over the past year than ever before,” Glenn Booraem, investment stewardship officer at Vanguard Funds, said in a statement.

The company is urging companies it owns to disclose long-term risks, Booraem said.

Vanguard, which manages about $4.5 trillion, announced an agreement yesterday with Walden Asset Management, a sustainable finance group in Boston that pressed Vanguard to pay attention to climate change.

In a letter announcing the deal, Tim Smith, who directs stockholder engagement for Walden, said the company withdrew a stockholder proposal after Vanguard said it would publish more information publicly about climate change and other issues.

“We are pleased that Vanguard is championing climate risk and board diversity in its numerous engagements with companies,” Smith said.

Every year stockholders file petitions at public companies to demand changes in corporate policies, and bigger shareholders have more leverage in these negotiations than smaller investors.

If Vanguard began to aggressively use its shares to encourage changes on climate change policy in companies it’s invested in, that could have implications in the private sector, according to observers.

Vanguard voted for climate resolutions at Exxon Mobil Corp. and Occidental Petroleum Corp. this spring.

“Our first preference is always to engage with a company,” said Arianna Stefanoni Sherlock, a Vanguard spokeswoman. The firm examines each proposal on its merits, she added.

The company said it would issue a report in August about its voting records on climate change and other topics.

“This report will feature deeper discussion of our thinking on climate risk,” Booraem said.

Asked why Vanguard was becoming more assertive on climate, Sherlock said, “The topic’s risen in prominence.”

In a separate announcement yesterday, the $25 billion sovereign wealth fund of New Zealand, known as the NZ Super Fund, said 40 percent of the fund was now considered “low carbon.”

“There is a global consensus that climate change presents material risks for long-term investors,” said CEO Adrian Orr.