ESG investing and how Vanguard’s 2 new ETFs can help

A growing number of people are looking to invest in companies that have a strong environmental, social, and governance (ESG) track record. To meet that demand, today we filed a registration statement with the Securities and Exchange Commission to launch 2 new ESG index ETFs:

  • Vanguard ESG U.S. Stock ETF
  • Vanguard ESG International Stock ETF

These new ETFs will offer broad exposure to U.S. and international companies of all sizes that pass exclusionary socially responsible screens. The funds are expected to be open for investments in September 2018.

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What’s ESG investing?

ESG investing is a strategy that looks at the business practices of companies to determine whether they’re sustainable and responsible investment options.

While companies can be evaluated on many different levels, there are 2 main types of screenings:

Activity

Definition

Examples

Exclusionary

Excludes companies with business practices that aren’t compatible with investors’ missions or values.

Companies that sell weapons, tobacco, alcohol, etc.

Inclusionary

Includes companies that rank highly in ESG criteria relative to their peers and that positively influence corporate behavior on ESG-related issues.

Companies that help preserve natural resources or promote social causes.

Why is Vanguard launching ESG-screened products now?

For nearly 20 years, we’ve been offering socially responsible funds to help investors reach their goals. In fact, Vanguard FTSE Social Index Fund (VFTSX) is now the largest (by assets under management) ESG-screened index fund in the U.S.*

As ESG investing becomes more and more popular, we want to offer you additional investment choices that align with your values. And because over 11,000 public companies now disclose their ESG practices, there’s a lot more information available to help us choose stocks of companies that are truly making a difference.

As your preferences continue to evolve, we’ll continue to offer you choices that are in line with our purpose to provide investors with a variety of low-cost, diversified investments.

Social responsibility is part of everything we do

We’re committed to engaging in responsible business, investing, and ethical practices in everything we do:

  • As a corporate steward. We’re focused on creating long-term value for our clients, our employees, and the communities where we operate and live.
  • As an investment manager. Our internal investment teams and external advisors regularly consider ESG principles when making investment decisions for our ESG index funds and all of our actively managed mutual funds.
  • As an investment steward. We closely evaluate the governance and oversight of the companies in which our funds invest. We advocate for better governance, meet with company leaders to express our views, and vote the proxies of those stocks accordingly.

What questions do you have about ESG investing?

We’re interested to hear what else you want to know about ESG-screened investments.

If you have an extra minute, please enter your question in the comment section below by selecting Add beneath Any comments?

We won’t show your comment publicly and we’re not able to respond, but we’ll use it to help us decide how to focus future articles.

*As of December 31, 2017. Source: Morningstar.
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