With corporate governance top of mind for many investors and with calls for the world's largest fund managers to hold accountable the companies in which they invest, Vanguard is increasing its efforts on that front across the pond.
Citing Glenn Booraem, Vanguard's head of corporate governance, The Financial Times reported that Vanguard, one of the world's largest fund managers, is creating a new team in Europe that would push for corporate governance standards that can be employed across European countries. Vanguard is creating the team in the U.K. as it has faced criticism that it does not do enough to push companies on hotbed issues such as climate change and executive pay. It also comes as Vanguard, with more than $5 trillion in assets under management, and its closest rival BlackRock, Inc. (BLK) could become even bigger, managing $20 trillion in combined assets in under a decade according to Bloomberg calculations.
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The FT reported that Adrienne Monley has been named as the head of investment stewardship for Europe and will lead the team, which is slated to increase to five members before the end of this year. She is currently a strategist for Vanguard's U.S. stewardship team, the group that has managed all of the proxy voting and engagement activities across the globe. The global stewardship team is expected to increase to 30 members, according to the report.
"We take our obligation to advocate in our investors' best interests very seriously across the globe. This is the right time to establish a new team in London, given the growth of our ownership in European companies," Booraem, Vanguard's head of corporate governance, told the FT.
The move comes after Bill McNabb, the chairman of Vanguard, issued a letter earlier this month calling on CEOs to discuss their long-term strategic plans and risks to their businesses. McNabb's letter echoes other executives at the fund company who have expressed concerns about climate change and the impact on businesses. In December, Rob Main, who is part of Vanguard's investment stewardship team, told Yale Climate Connections that many companies in the materials, energy and industrial sectors face risks from climate change that will be "very relevant" to investors. That is why the mutual fund giant is urging companies to discuss those risks.
"Given our duty to steward our shareholders' long-term investments, we must be aware of this risk, where it's most relevant, and ensure companies are addressing it in an appropriate manner," Main said in the interview. The Vanguard executive pointed to extreme weather threatening food and textile companies that rely on agriculture as one example. Meanwhile, limits on carbon pollution could hurt the profits at a fossil fuel company. Main told Yale Climate Connections that Vanguard is particularly interested in scenarios in which ignoring climate change's impact over the long haul could make a company appear more valuable than it ultimately will be. "We have a starting point of believing that well-governed companies will be better performers long term," he said in the interview.