Vanguard, one of the largest investment managers in the world, announced that $290 billion of its actively managed assets under management, or 17% of its $1.7 trillion in actively managed AUM are invested in line with the goal of achieving net-zero emissions by 2050.
The announcement was made as part of Vanguard’s commitment to the Net Zero Asset Managers initiative (NZAM), a coalition of asset managers committed to supporting the goal of net zero greenhouse gas emissions by 2050. Since launching in December 2020, 273 asset managers have signed on to the initiative, representing over $61 trillion is assets in AUM. Vanguard joined the initiative early last year.
In an update report provided today by NZAM, the initiative discussed several themes that have emerged in the first 18 months of the initiative, as asset managers begin efforts to plan and align assets with the net zero goal, including highlighting the challenges that asset managers focused mostly on passive investment strategies face in transitioning assets to net zero alignment.
More than $5 trillion of Vanguard’s AUM is in index equity assets. While Vanguard noted in its update that these assets are not included in its initial NZAM commitment, it stated that over 70% of is index equity assets are invested in companies with publicly stated emission reduction goals, and that its investment stewardship teams will engage with companies held in its index funds about their commitments.
In its update, Vanguard stated:
“As Vanguard continues to engage, introduce new products, and evolve our approach, we expect the portion of assets managed in alignment with net zero objectives will increase. Several headwinds could impact progress, ranging from destabilizing geopolitical events to inconsistent disclosures and methodologies to the failure of governments to act individually and collectively. Despite these challenges, we are committed to mitigating material financial risks, including climate-related risks, that can erode our clients’ long-term investment returns and undermine their financial goals.”