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Vanguard's voice on societal risks

Public attention often focuses on difficult issues such as environmental concerns, gun violence, and the opioid crisis. Such topics elicit strong emotions and a desire for action. Vanguard is constantly thinking about the role we play as a long-term investor representing the best interests of those who have entrusted us with their savings.

Vanguard's role as an investor

As an investment manager, Vanguard stewards the assets of 30 million clients with a wide range of personal beliefs. What they all have in common is that they've asked us to protect their money and help it grow—for retirement, a first home, or a child's education.

One of the most important ways we do this is by advocating for and protecting their financial interests in boardrooms across the globe. We regularly meet with company leaders to learn more about a company's strategy, risk oversight, and long-term goals. We have a responsibility to understand how business activities that may pose a risk to society may also pose a material risk to the long-term value of our funds. We seek assurance that boards oversee and own these risks and that they take appropriate measures to mitigate them and disclose them to the market.

Some people may be surprised to hear we have a dedicated team that analyzes and engages on an array of governance, environmental, and social risks. But this is nothing new for Vanguard. Through quiet diplomacy, we often discuss headline-grabbing issues directly with company leaders.

For example, conversations about climate risk oversight and disclosure are a regular part of our engagements with companies in carbon-intensive industries. Vanguard has also engaged with leaders of public companies that manufacture guns and sell them to civilians to understand how they think about, mitigate, and disclose the risks their products may pose. In addition, we've met with leaders in the pharmaceutical industry to understand the measures their boards are taking to oversee, reduce, and disclose the risks of opioid drug distribution.

A keen focus on the long term

For us, every question about our engagement on environmental, social, or governance matters comes down to: "How does this affect the long-term value for our fund investors?" That orientation provides clarity for us, and we believe it makes our positions less confusing for all stakeholders. We also know that over the long term, the interests of fund shareholders and the broader stakeholder community often converge.

Keep in mind that Vanguard index funds will hold a stock for as long as it's in the benchmark index. We need to know that companies are built and managed to deliver sustainable financial outcomes. Where societal risks may pose a material risk to a company, we engage to uphold our responsibilities as fiduciaries and protect the value of our shareholders' investments. If a company's business practices or products put people's health, safety, or dignity at risk, they present long-term financial risks to investors, too.

Vanguard will continue to do our part, just as we've done since our 1975 inception. We will hold company boards and leaders accountable. We will advocate for the interests of long-term investors. And we will speak with our voice and our proxy votes to protect the interests of the people who entrust us with their futures.