Investment giant pulls out of Carney’s Net Zero alliance

THE investment behemoth Vanguard has withdrawn from Mark Carney’s climate change alliance in a major blow to the initiative.

The world’s second largest money manager, which oversees more than $7trillion (£6trillion) of assets, has left the Net Zero Asset Managers (Nzam) grouping because the organisation’s full-blooded commitment to green values resulted “in confusion about the views of individual investment firms”.

Vanguard runs passive index funds that aim to track the wider market, rather than actively intervening in the strategy of any individual companies. Critics have suggested its climate campaigns were at odds with this approach.

The company said: “We have decided to withdraw from Nzam so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks – and to make clear that Vanguard speaks independently on matters of importance to our investors.”

Nzam was launched in late 2020 to encourage asset managers to reach net zero emissions by 2050.

Last year it joined an umbrella climate finance organisation known as the Glasgow Financial Alliance for Net Zero (Gfanz) which was set up by Mr Carney, the former governor of the Bank of England. Vanguard will leave both groups.

Asset managers are increasingly coming under fire in the United States over their commitment to so-called ethical investing, with Republican politicians accusing companies of pursuing a “woke” agenda.

Separately, a small British activist investor has called for the chief executive of Blackrock to resign, accusing him of “hypocrisy” over the company’s ethical investing strategy.

Bluebell Capital Partners hit out against the world’s biggest money manager, saying its focus on environmental, social and governance (ESG) issues was inconsistent and calling for Larry Fink to step down.