Good governance has never been more important

23 Sep 2021

Market commentary, Active investing

Against a backdrop of economic uncertainty and disruption caused by the pandemic, Vanguard remained committed to effective stewardship by interacting with thousands of board members and company leaders in the first half of 2021.

We sought to understand their decision-making around the topics and trends that have shaped the global governance landscape in recent months, including the risks associated with the pandemic; workforce diversity, equity, and inclusion matters; and shareholder concerns about the global climate crisis.

We engaged with directors and other stakeholders on a range of issues, all of which are anchored to our four principles of corporate governance: board composition, shareholder rights, executive remuneration and strategy and risk oversight.

Vanguard’s Investment Stewardship team engaged with 734 companies in 29 countries and voted on 137,826 proposals at 10,796 companies in the six months ended 30 June 2021. A more detailed breakdown of the funds’ voting and engagement record can be found in our latest Investment Stewardship Semiannual Report.

Our engagements carried out on behalf of Vanguard’s internally managed equity funds - investments that represented nearly $1.9 trillion in equity assets under management - show the power of staying invested over the long term.

We discussed a range of governance matters, including capital allocation and executive compensation; social issues, which remained in the spotlight as we saw an increase in shareholder proposals on diversity, equity and inclusion topics; and climate-related risk.

We also engaged on corporate political activity, and human rights. By focusing on matters of material risk to investors, we look to keep corporate boards focused on long-term value creation for their shareholders.

Overall, our Investment Stewardship semiannual report demonstrates the important role that index funds can play in advocating for good governance. In addition, we can confirm our recent approval as a signatory of the UK Stewardship Code - a leading global standard for investment stewardship practices.

To learn more about Vanguard’s approach to investment stewardship, watch our CPD-accredited webinar here.

Investment risk information

The value of investments, and the income from them, may fall or rise and investors may get back less than they invested.

Important information

For professional investors only (as defined under the MiFID II Directive) investing for their own account (including management companies (fund of funds) and professional clients investing on behalf of their discretionary clients). In Switzerland for professional investors only. Not to be distributed to the public.

The information contained in this document is not to be regarded as an offer to buy or sell or the solicitation of any offer to buy or sell securities in any jurisdiction where such an offer or solicitation is against the law, or to anyone to whom it is unlawful to make such an offer or solicitation, or if the person making the offer or solicitation is not qualified to do so. The information in this document does not constitute legal, tax, or investment advice. You must not, therefore, rely on the content of this document when making any investment decisions.

Issued in EEA by Vanguard Group (Ireland) Limited which is regulated in Ireland by the Central Bank of Ireland.

Issued in Switzerland by Vanguard Investments Switzerland GmbH.

Issued by Vanguard Asset Management, Limited which is authorised and regulated in the UK by the Financial Conduct Authority.

Good governance has never been more important

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