Vanguard’s updated commentary on its approach to climate risk governance reaffirms its commitment to focusing on company-specific material risks (climate or otherwise) that have the potential to undermine long-term shareholder value. For those companies confronted with material climate-related risks, the piece outlines Vanguard’s expectations for boards in relation to overall board competence, risk oversight and mitigation, and disclosure oversight.
Changes to its 2023 commentary reflect changes in the climate reporting standards and associated regulatory environment. Vanguard supports the ISSB standards, which are based on or look to the TCFD recommendations and SASB standards (both of which Vanguard supported in the past). That said, Vanguard defers to each company to determine the most appropriate reporting standard based on its particular facts and circumstances. Consistent with the foregoing, Vanguard may query companies in its engagements on the board’s preparation for changing climate-related regulatory and disclosure standards.