Vanguard Presses Companies on Guns, Opioids, Climate

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By Andrea Vittorio

Vanguard Group is using its investment heft to press companies on gun violence in schools, the opioid crisis, and climate change.

The world’s second-largest asset manager met with companies that make and sell guns after the February Parkland, Fla. school shooting to talk about how they plan to prevent similar tragedies from happening again, Vanguard said in a commentary posted to its website April 20. Its investment stewardship team has also been talking about opioid-related risks with companies in the pharmaceutical industry and climate-related risks with companies in carbon-intensive industries.

The commentary, called “Vanguard’s voice on societal risks,” said it notched nearly 1,000 such engagements with companies last year. Vanguard has ramped up its engagements in recent years as it and other passive investing giants shift toward more active oversight of the companies they own.

“We are not engaging with these firms to further a political or social agenda, but rather, we engage to uphold our responsibilities as fiduciaries and protect the value of our shareholders’ investments,” said Vanguard, which owns shares in more than 13,000 public companies globally. Vanguard said every environmental, social, or governance issue it engages in is based on how that issue affects the long-term value of its funds.

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Other passive investors that are obligated to hold a stock for as long as it’s in an index are becoming more vocal on social issues. BlackRock Inc.’s chief executive officer Larry Fink sent a letter to CEOs in January asking them to explain how their business makes “a positive contribution to society” beyond financial performance.

Like Vanguard, BlackRock also reached out to firearms companies in the wake of the Florida shooting to talk about steps they could take to support responsible use of their products. BlackRock, via its passive products, is the top institutional owner of American Outdoor Brands Corp., parent of the maker of the AR-15 rifle used to kill 17 people. Vanguard and State Street Corp. are among its top 10 holders.

State Street, the third-largest asset manager, likewise said after the Parkland shooting that it would engage with weapons makers. BlackRock has since announced plans to start two exchange-traded funds that will exclude civilian firearm makers and large sellers.

To contact the reporter on this story: Andrea Vittorio in Washington at avittorio@bloomberglaw.com

To contact the editor responsible for this story: Fawn Johnson at fjohnson@bloomberglaw.com

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