Vanguard Group's decision last month to quit a key climate change coalition underscores how the retail investors who dominate its client base focus less on environmental, social and corporate governance (ESG) priorities than institutional investors.
asset-management arm, rely more on institutional investors including pension funds and foundations. Both BlackRock and State Street have stuck with NZAM.
A FINRA Investor Education Foundation study of retail investors last March found only 9% of respondents held ESG investments. This is despite 57% of them saying they thought ESG investing can lead to positive change in the world. A big factor behind this gap is retail investors' lack of familiarity or knowledge about ESG products, the study found.
"You wonder why Vanguard signed up in the first place," said Hortense Bioy, global director of sustainability research at fund ratings firm Morningstar IncVanguard representatives said the company looks forward to continuing constructive conversations with policymakers. A BlackRock spokesperson said it "has a large and diverse client base with a range of investment goals" and that as a fiduciary, "our only agenda is delivering the best financial results.
One is New York City Comptroller Brad Lander, who oversees some $41 billion of city assets managed by BlackRock, $31 billion managed by State Street, and none by Vanguard. "We have made this commitment to net zero carbon and we can't achieve it unless our asset managers are aligned with it," Lander said.
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