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World’s biggest mutual fund manager quits Net Zero effort | Business and Economy News

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Top investors, including Vanguard, face pressure from Republican US politicians over the use of ESG factors in their investments.

Vanguard Group Inc, the world’s largest mutual fund manager, has said it is withdrawing from a major investment industry initiative to tackle climate change, saying it wants to demonstrate independence and make its views clear to investors.

Top investors, including Pennsylvania-based Vanguard, are facing increasing pressure from U.S. Republican politicians to use environmental, social and governance (ESG) factors in choosing and managing securities.

One focus of criticism has been the initiative, known as the Net Zero Asset Manager (NZAM) initiative, which launched in late 2020 and calls for fund companies to meet net zero emissions targets by 2050 to limit global warming. We encourage you to do so. As of November 9, NZAM counted 291 signatories representing approximately $66 trillion in assets under management.

Vanguard’s withdrawal from the initiative, which manages about $7 trillion in assets, will hurt efforts to organize the industry to move away from fossil fuels. that climate change could affect their long-term returns.”

As recently as May, Vanguard touted commitments made in line with NZAM’s goals. On Wednesday, Vanguard posted a statement on its website saying industry initiatives like NZAM could be disruptive.

“To provide investors with the clarity they want about the role of index funds and our views on material risks, including climate-related risks, and to make clear that Vanguard will speak independently on issues. We have decided to exit NZAM in order to do so, which is important for our investors,” said Vanguard. statement.

A privately held Vanguard did not reach out to executives for comment. But the statement addresses criticism from some investors and US Republican officials that efforts like NZAM violate antitrust laws. The concerns had already led him to see NZAM’s UN-affiliated parent company soften its policy on financing fossil fuels.

Vanguard’s rivals, including BlackRock Inc, have taken the opposite position, saying joining NZAM does not contradict their independence. A BlackRock spokesperson said Wednesday that the company remains part of NZAM.

Daniel Wiener, chairman of Adviser Investments in Newton, Massachusetts, and a longtime Vanguard observer, said the company’s exit reflects the lack of a strong leader on ESG issues like BlackRock CEO Laurence Fink. said to show.

“Retreating from this means that Vanguard is in constant winds of change. They don’t have the strong personalities that champion the cause as Fink does,” Wiener said. I was.

Kirsten Snow Spalding, vice president of sustainability nonprofit Ceres, a founding partner of NZAM, said in a statement: fiduciary duty. ”

Reclaim Finance campaigner Lara Cuvelier said NZAM can now push harder for change.

“Vanguard has never taken its net-zero commitments seriously,” Cuvelier said in a statement.

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