Vanguard Group Bolts From “Net-Zero” Group In Major Blow To ESG’s

Some very good news from Wall Street. One of the ESG movement’s biggest backers, Vanguard Group, is backing away from their efforts.

Vanguard Group Inc. is walking out of the world’s largest climate-finance alliance, marking the coalition’s biggest defection to date as US Republicans step up their threats against firms deemed hostile toward the fossil-fuel industry.

…Vanguard indicated its decision rested in a desire to maintain the freedom not to restrict its investment options.

Vanguard’s decision followed a “considerable period of review,” according to a company statement Wednesday. Withdrawing from the Net Zero Asset Managers initiative, which is a sub-unit of the Glasgow Financial Alliance for Net Zero, “will help provide the clarity our investors desire” about everything from the role of index funds, to financial risks in the context of climate change, the firm said.

Initiatives such as the net-zero alliance “can advance constructive dialogue, but sometimes they can also result in confusion about the views of individual investment firms,” Vanguard said. “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 Big Three, whom Vanguard belongs to, can cast a large amount of votes in any S&P 500 company’s director election and Vanguard’s leaving is very significant for the ESG campaign and the overall economy.

EGS’s essentially force companies to make decisions based on environmental ideology that may not match how they operate. Linking investment to forced social or sustainability dogmas also undermines the U.S.’s independence in many areas of business such as including energy, social decisions, and business.

Now Vanguard’s departure will prevent that from happening. Besides, ESG ratings are are not good measures of a business’s performance and, hopefully, other Wall Street groups involved in this effort will follow Vanguard’s lead.

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