Dive Brief:
- Vanguard has adjusted its proxy voting guidelines for its engagement with U.S. companies, diluting its board composition recommendations on diversity, the investment manager confirmed to ESG Dive Monday.
- The Pennsylvania-headquartered firm’s 2025 U.S. regional proxy voting guidelines, released Friday, exclude a recommendation from Vanguard’s 2024 guidelines for the region that stated boards should “at a minimum, represent diversity of personal characteristics, inclusive of at least diversity in gender, race and ethnicity.”
- “Vanguard is an independent asset manager owned by the investors in our funds, and our proxy voting policies are singularly focused on corporate governance practices associated with long-term shareholder returns,” Netanel Spero, a Vanguard spokesperson, said in an emailed statement to ESG Dive.
Dive Insight:
Vanguard’s updated U.S. proxy voting policy places an emphasis on complying with “relevant market-specific governance frameworks” and market-specific norms. The exclusion of recommendations comes as President Donald Trump has looked to reverse his predecessor’s legacy on diversity, equity and inclusion at the federal level and ordered agencies to put pressure on private sector DEI efforts.
Vanguard still retains language in both its 2025 global proxy voting policy and U.S. regional policy that states its funds look for company boards “to be fit for purpose by reflecting sufficient breadth of skills, experience, perspective, and personal characteristics (such as age, gender, and/or race/ethnicity) resulting in cognitive diversity,” to enable effective and independent oversight.
“The updates to the 2025 proxy voting policies do not represent significant year-over-year changes — they are a standard part of Vanguard’s annual review process, and reflect the evolving regulatory landscape across local markets,” Spero said.
Vanguard’s 2025 global and U.S. proxy voting guidelines on board composition say that to assess how well-suited companies’ board composition is, its managed funds “seek fulsome disclosure of a board’s process for building, assessing, and maintaining an effective board well-suited to supporting the company’s strategy, long-term performance, and shareholder returns.” Those disclosures should include each board member’s “range of skills, background and experience” and their alignment with company strategy, the policies say.
The changes were first reported by Reuters on Friday. Vanguard’s 2024 U.S. proxy voting policy is no longer available on its site, following the update, but has been preserved by web archive, the Wayback Machine. The updated voting policy is in effect as of Feb. 1.
The policy changes come amid a broader retreat from public ESG and DEI commitments and falling support for environmental and social shareholder proposals. Vanguard supported zero environmental and social proposals in the 2024 proxy season, as BlackRock and State Street also supported fewer environmental and social proposals and overall support for related proposals fell to 16.2%, according to Diligent Market Intelligence.
Vanguard also defended its decision to back ExxonMobil CEO Darren Woods for re-election in 2024, after state finance officials publicly opposed him and his director slate for the energy giant’s lawsuit against a pair of activist investors.
This proxy season will be the first under CEO Salim Ramji, after Tim Buckley retired in 2024. Once Ramji officially took the reins, over 8,000 individual Vanguard clients wrote to the investment firm’s top executive, urging him to put climate risk “at the forefront” of Vanguard’s investment management strategies.
