V Vanguard CEO Tim Buckley says the company's commitment to net zero emissions

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V Vanguard CEO Tim Buckley says the company's commitment to net zero emissions

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You can see other videos from our team by tapping here. Try refreshing your browser, or Chief Executive Tim Buckley said the group, which manages US $8.1 trillion for more than 30 million investors and is the largest investor in coal companies in the world, was determined to protect its clients from climate risks, but this would not require it to end new commitments to fossil fuel industries.

Vanguard doesn't want to lead the company's strategy. We engage with companies on climate change, ask them to set goals and report how they are mitigating climate risks. The transparency will ensure climate risks are priced appropriately by the market, Buckley said in an interview with the Financial Times. He believes that companies that have a large carbon footprint could play a critical role in the transition to a low-carbon future.

Our duty is to maximize long-term total returns for clients. Climate change is a risk, but it is only one factor in an investment decision. There is already a pension crisis and we have to make sure that climate concerns don't make that worse, Buckley said. A senior HSBC Holdings PLC executive accused central bankers and policymakers of overstating the risks of global warming. Buckley made a statement ahead of the publication of Vanguard's first progress report on the goal of reaching net zero carbon emissions across its investment portfolios by 2050. Just US $290 billion, or 17 per cent, of Vanguard's US $1.7 trillion in actively managed assets is aligned with net zero by the year 2050. It expects half of US $290 billion to be net zero by 2030, the agreed interim target date set for members of the Net Zero Asset Managers initiative, a coalition of 235 large investors that together manage about US $57.5 trillion.

Vanguard has chosen not to attach interim net zero targets to passive index-tracking funds that form the bulk of its assets. Net zero targets were not built into the original objectives of the funds, according to the company. Asset managers in the United States have a fiduciary duty to maximize returns, so adding other goals that are not in a prospectus could expose them to legal challenges. Active managers have more power to decide what factors to use when deciding which company to buy. Vanguard believes that a 50 per cent reduction in emissions in these passive funds will be very difficult to achieve by 2030 without substantial action by the companies themselves and much more clarity on how government policy might evolve.

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RBC RBC Activist investor who went after Shell took stake in Suncor More than 70 per cent of Vanguard's index equity assets are invested in companies with publicly stated emission reduction goals. Buckley said that over US $1 trillion of those assets are invested in companies that have already committed to net zero targets. Environmental campaigners argue that none of the three largest asset managers in the world — BlackRock Inc. Vanguard and State Street Corp. — have policies that will achieve absolute reductions in carbon emissions by the end of the decade. Vanguard ranked last of 25 large asset managers in a fossil fuel and climate change evaluation published in April by Reclaim Finance and Urgewald, two environmental campaign groups. Asset managers need to send clearer signals to the fossil fuel industry. Any investor committed to achieving carbon neutrality by the year 2050 must immediately cease all investments in companies that are developing new oil and gas supply projects, said Lara Cuvelier, who is a spokesman for Reclaim Finance.