Vanguard has an important role to play in safeguarding investors from material financial risks, including climate risk.
Climate change is a complex risk that presents physical, societal and economic challenges to countries around the world. In this second of two Q&As, John Galloway, global head of Vanguard Investment Stewardship, discusses Vanguard’s views on climate change and the role that effective stewardship can play throughout the energy transition to encourage companies to mitigate the financial threat to long-term investors.
Our investment stewardship activities are focused on addressing material risks, including environmental, social and governance (ESG) risks, at the companies held by our equity index funds. These risks, if not recognised and managed, can undermine long-term value for investors.
Engagement is central to Wellington’s sustainable investing philosophy. These multi-disciplined interactions provide the portfolio managers with a balanced perspective on sustainability issues, offer an opportunity to raise specific ESG discussion points and serve to challenge assumptions about a company's management and board.
Advisers increasingly need to guide clients through the ESG landscape, but what are the key questions to ask to determine an investor’s goals?