Vanguard calls for governance best practice
Vanguard has affirmed the key elements of its approach to investment stewardship include four pillars of corporate governance evaluation such as board composition, governance structures, appropriate compensation, and risk oversight.
In a letter to public companies, Vanguard’s global chief executive, Bill McNabb emphasised the importance of gender diversity on boards, climate risk disclosure, ongoing engagement, and dialogue with companies.
“Our investors depend on Vanguard to be a responsible steward of their assets, and we promote principles of corporate governance that we believe will enhance the long-term value of their investments,” he said.
“And a strong board comprises diverse, experienced directors that serve as our eyes and ears on risk.”
Vanguard said it conducted nearly 1,000 global engagements in the past 12 months which came as a result of an analysis by its investment stewardship team.
Vanguard’s investment stewardship officer, Glenn Booraem, added: “You can expect us to speak out to serve as a voice for our clients, and to protect and further their economic interests”.
“We continue to address traditional governance issues, such as misaligned compensation practices, unequal shareholder voting rights, and ineffective boards, and increasingly, we’ve taken stronger positions on emerging topics, including gender diversity on boards and climate risk disclosure,” he said.
“As significant long-term owners of many companies in industries vulnerable to climate risk, Vanguard investors have substantial value at stake.”
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