Vanguard is committed to providing investors with the information and products they need to make sound investment choices that help them meet their financial goals and reflect their personal preferences.
Vanguard is built to help individual investors reach their financial goals. More than 50 million people around the world have chosen to entrust Vanguard with their hard-earned savings. They have a wide range of investment goals, time horizons, risk tolerance levels, and personal perspectives. Our goal is to help investors maximize their long-term returns and give them the best chance for investment success as they save for their goals, whether it be retirement, a child’s education, a home, or simply a more secure financial future. Vanguard’s unwavering focus on client outcomes informs our approach to responsible investment.
Vanguard is committed to providing investors with the information and products they need to make sound investment choices that help them meet their financial goals and reflect their personal preferences. We have a disciplined approach to product development, and we offer mutual funds and ETFs with enduring investment merit that are designed to meet the long-term needs of our investors. While this includes a wide selection of traditional funds, we also offer ESG funds that consider material environmental, social, and governance matters through a range of stated strategies and objectives.
Some fund investors also wish to make their voices heard directly through proxy voting associated with their investments. Since 2023, Vanguard has been piloting ways for investors to make their voices heard by enabling them to select from a range of proxy voting policy options. These pilot efforts are currently limited to certain index funds as Vanguard explores ways to make the process more cost-effective and user-friendly. We are committed to advancing investor choice and continue to actively explore ways to empower investors to participate more directly in the proxy voting process.
Vanguard’s product lineup includes both index funds and funds that use active management investment strategies. Collectively, Vanguard investors have chosen to invest the majority of their assets in broadly diversified index funds. By design, index fund managers don’t choose the securities in a fund. Instead, they buy and hold the securities included in the benchmark index and capture the return that the market provides. It’s an approach that has helped build wealth for generations of everyday investors. For index investors who have ESG-related preferences, Vanguard’s exclusionary ESG index products are designed to avoid or reduce exposure to specific industries (such as firearms, tobacco, or fossil fuels) while still seeking to achieve market-like returns.
For investors who seek to outperform market benchmarks, we offer low-cost actively managed funds. Most of our active funds do not have ESG-specific mandates, and most are managed by external investment advisors, separate from Vanguard. The managers of these products have their own approaches to integrating material ESG risks into their investment processes.
Vanguard also offers actively managed funds that have stated ESG-specific mandates. These funds, managed by external advisors, aim to generate excess return by allocating capital to companies that the fund managers assess as demonstrating leading ESG practices consistent with each fund’s mandate.
Vanguard investors select the investments most appropriate for them from our broad range of options based on their individual preferences, priorities, and risk tolerance. Only clients who affirmatively choose ESG funds are invested in these funds. Vanguard does not boycott any company, industry, or sector of the economy. In addition, Vanguard maintains robust policies and procedures to ensure compliance with all applicable laws and regulations, including sanctions laws, related to portfolio company holdings.
For more information about investment products: Mutual funds, ETFs and more
Good corporate governance matters. Well-governed companies should produce higher value for investors over the long term. When portfolio companies generate value over the long term, our funds generate value for Vanguard fund investors. Vanguard’s Investment Stewardship team is responsible for voting proxies and engaging with portfolio companies on behalf of Vanguard-advised funds,1 including Vanguard equity index funds and ETFs.
The Investment Stewardship team engages with companies about material risks, including material ESG risks, and seeks to understand how boards disclose and oversee these material risks. The funds’ proxy votes are based on the application of clear, publicly disclosed policies as well as procedures overseen by the board of each Vanguard fund. We disclose the funds’ proxy voting policies and how the Vanguard funds vote so that fund investors are aware of how the votes advance their interests in long-term investment value.
The Vanguard-advised funds’ portfolio construction process is inherently passive—the equity index funds seek to track benchmarks determined by independent index providers. Our approach to investment stewardship operates in that context. Accordingly, with respect to companies held by Vanguard-advised funds, we do not seek to dictate strategy or operations, nor do we submit shareholder proposals or nominate board members. We believe that the precise strategies and tactics for maximizing long-term investment returns should be decided by a company’s board of directors and management team. Similarly, Vanguard does not use investment stewardship activities to pursue public policy objectives. We believe that setting public policy, including policy on environmental and social matters, is appropriately the responsibility of elected officials.
For more information about Investment Stewardship: Investment stewardship and corporate governance
Vanguard is committed to understanding and attending to material risks that can erode our investors’ long-term returns, including climate-related risks. Our approach spans several key areas of focus:
External organizations, including those that focus on ESG matters, can advance constructive dialogue on important investment topics. Vanguard may participate in external organizations that align with Vanguard’s mission and our focus on long-term investment outcomes if we believe that doing so advances our objective of helping investors achieve investment success.
We routinely assess participation in external organizations to ensure that involvement continues to align with Vanguard’s mission and investment perspectives and does not conflict with our duties to investors. In every instance, Vanguard maintains its independence in engagement activities with portfolio companies and in making proxy voting decisions in accordance with the funds’ voting policies and with the goal of promoting long-term shareholder returns. That includes Vanguard’s involvement with any trade association, industry group, or initiative. Vanguard speaks independently on matters of importance to our investors, including responsible investment and climate change.
Vanguard does not make any commitments to third-party groups that supersede our duty to our investors. Vanguard also does not collaborate with other investors to engage with individual issuers to achieve specific outcomes (including investment, social, or environmental outcomes). If we determine that an organization’s mandate has changed, or that it no longer aligns with Vanguard’s mission or investing perspectives, or that its strategies or actions create a credible risk of confusion about Vanguard’s involvement or independence, we will reassess our engagement with the organization. Regardless of Vanguard’s membership status in any given organization, our role as an investment manager is to uphold the stated investment objectives of each fund selected by our investors.
1 Vanguard’s Investment Stewardship program is responsible for proxy voting and portfolio company engagement on behalf of the quantitative and index equity portfolios advised by Vanguard (together, “Vanguard-advised funds”). Vanguard’s externally managed portfolios are managed by unaffiliated third-party investment advisors, and proxy voting and engagement for those portfolios are conducted by their respective advisors.
2 Indexing relies on efficient and fair capital markets. Companies’ disclosure of material financial risks is central to that market health, which is why material risk identification and disclosure is a critical priority for Vanguard.
3 TCFD seeks to advance constructive climate-change disclosure practices that will help investors understand the material financial impacts of climate-related risks and opportunities associated with the companies in which they invest.
Notes:
For more information about Vanguard funds or Vanguard ETFs, visit vanguard.com to obtain a prospectus or, if available, a summary prospectus. Investment objectives, risks, charges, expenses, and other important information are contained in the prospectus; read and consider it carefully before investing.
Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling.
All investing is subject to risk, including possible loss of principal.
ESG portfolios are subject to ESG investment risk, which is the chance that the stocks or bonds screened by the index provider or advisor, as applicable, for ESG criteria generally will underperform the market as a whole or, in the aggregate, will trail returns of other portfolios screened for ESG criteria. The index provider or advisor assessment of a company, based on the company's level of involvement in a particular industry or their own ESG criteria, may differ from that of other portfolios or an investor's assessment of such company. As a result, the companies deemed eligible by the index provider or advisor may not reflect the beliefs and values of any particular investor and certain screens may not exhibit positive or favorable ESG characteristics. The evaluation of companies for ESG screening or integration is dependent on the timely and accurate reporting of ESG data by the companies. The advisor may not be successful in assessing and identifying companies that have or will have a positive impact or support a given position. In some circumstances, companies could ultimately have a negative or no impact or support of a given position. The weight given to ESG factors for active non-ESG funds may vary across types of investments, industries, regions and issuers; may change over time; and not every ESG factor may be identified or evaluated. Where ESG risk factor analysis is used as one part of an overall investment process (as is the case for actively managed equity and fixed income non-ESG Funds), such Funds may still invest in securities of issuers that all market participants may not view as ESG-focused or that may be viewed as having a high ESG risk profile.