Vanguard Group is leaving an asset managers initiative committed to net-zero goals and will pursue similar objectives independently, it said Wednesday in a statement on its website.
With roughly $7.1 trillion under management, Vanguard was one of the largest members of the Net Zero Asset Managers initiative, which as of November had 291 signatories with a collective $66 trillion under management, committed to net-zero carbon emissions by 2050.
Vanguard said in its statement that it was withdrawing from the initiative it joined in 2021 to provide "clarity" to its 30 million-plus investors, 80% of whose assets are invested through index funds.
"Such industry initiatives can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms. That has been the case in this instance, particularly regarding the applicability of net zero approaches to the broadly diversified index funds favored by many Vanguard investors," the statement said.
Withdrawing from NZAM will provide clarity to its investors about the role of index funds and climate-related risks "and to make clear that Vanguard speaks independently on matters of importance to our investors," it said.
The withdrawal from NZAM is part of a continuous assessment of participation in external organizations, said Vanguard, pledging to continue interacting with companies on how they address climate risk, and to report on those efforts.
Climate advocacy group Vanguard S.O.S., a frequent critic of Vanguard's approach to climate change, said in a separate statement that while the asset manager "claimed to be moving in the right direction," the decision to leave NZAM "is dropping any pretext."