Published by Barron’s.
Vanguard held a shareholder meeting on Wednesday for the first time in nine years, mostly to approve changes to investment policies and appoint directors. And then there was the genocide issue.
A group of shareholders called Investors Against Genocide submitted a proposal asking Vanguard to adopt an anti-genocide policy so that fund managers would avoid stocks that “substantially contribute to genocide or crimes against humanity.” Investors Against Genocide says that investment funds shouldn’t hold stocks like PetroChina, which did business with the Sudanese government during the genocide there. Vanguard had urged shareholders to reject the proposal, arguing that genocide, while awful, is primarily an issue for diplomats to handle.
The genocide vote failed (shareholders agreed with Vanguard), with investors in all 48 funds where it was raised rejecting it. Vanguard did not release specific vote totals, but noted, in response to a question from Barron’s, that just 3 of 48 funds that had it on their ballots gave it more than 25% of the vote.
Eric Cohen, a co-founder of Investors Against Genocide, had said in an interview before the vote that he didn’t expect to win but was hoping that at least 25% of investors sided with him, sending a message to Vanguard that it needs to have stricter policies about where it invests. Overall, Cohen says, about 20% of Vanguard voters sided with Investors Against Genocide. In unaudited results he sent to Barron’s , the top result in his favor was 39.4% support from investors in FTSE Social Index Fund.
“With about 20% of its shareholders rejecting Vanguard’s recommendation and voting to support genocide-free investing, I hope that Vanguard recognizes the importance to its customers of making an effort to avoid investments tied to genocide.
Vanguard should take the first steps by implementing a policy for its actively managed funds and for at least some of its index funds, particularly those involving large indexes for which Vanguard only samples the large list of companies in the index.”
