Vanguard invests in companies that pollute the Delaware Valley | Opinion

Many of us who invest with Vanguard hope to enjoy a future with our children and grandchildren — and to pass some of our nest egg on to them. But the paradox of Vanguard is that it manages our money in a way that undermines these hopes.

Vanguard says that it cares for its clients, who are often working families saving for retirement. But its tremendous holdings — over $8 trillion in assets — are prolonging destructive fossil fuel extraction and combustion. Vanguard is one of the biggest institutional investors in coal, oil, and gas globally, holding over $400 billion in fossil fuel stocks, including top stakes in ExxonMobil, Chevron, and ConocoPhillips.

Of immediate concern to those who live in and around Philadelphia are the direct effects of Vanguard’s holdings along the Delaware River. Vanguard is the largest shareholder in the energy company Exelon, and through it has been a major investor in the power plants in Croydon, Southwark, and Eddystone — which generate airborne pollutants and lots of greenhouse gases.

Vanguard is also the largest investor in Delta Air Lines, the parent of Monroe Energy, which runs the oil refinery in Trainer, just south of Chester. Refineries release pollution into the air, ground, and water, negatively impacting the health of neighboring communities. Several workers there were exposed to a toxic chemical leak in 2019.

Also in Chester, Vanguard has been a top investor in the company that owns the Delaware Valley trash incinerator, one of the largest of its kind. Incineration is even dirtier than coal and can increase the occurrence of asthma, cancer, and neurologic diseases in nearby communities. Vanguard’s assets support facilities like these all around the world.

In addition to everyday pollution, there’s the unthinkable risk of disasters like spills, explosions, and fire. AdvanSix, which had a large chemical spill in Philadelphia in January, is a Vanguard holding. Vanguard is also a major investor in New Fortress Energy, which is planning a liquefied natural gas plant for Gibbstown. If built, explosive methane will be transported by train through densely populated neighborhoods of Philadelphia and surrounding counties. These trains are called “bomb trains” because of the risk of leaks and catastrophic explosions.

Not only are these facilities hazardous in the immediate future, but they also continue to pump greenhouse gases into the atmosphere. We’ve already seen more frequent storm surges and tidal flooding, made worse by warmer oceans — like the flooding and destruction at the Jersey Shore and along the Delaware River with Hurricanes Sandy and Ida. The tremendous costs of cleanup, rebuilding, or relocating don’t show up on the balance sheets of companies whose emissions contributed to the problem. The rest of us are left footing the bill.

The U.S. Securities and Exchange Commission is beginning to step in. It proposed regulations that add climate change to the risks that companies must disclose. This would be a regulatory sea change, but only if investors can take advantage of it.

The International Energy Agency concluded in 2021 that there can be no new investments in fossil fuels going forward if we are to avoid the worst consequences of those emissions. Asset managers like Vanguard need to lead the transition by moving capital from conventional energy into new forms of energy production.

To its credit, Vanguard voted with other shareholders last year to replace two ExxonMobil board members with climate-conscious candidates. In 2021, Vanguard also signed on to the Net Zero Asset Managers Initiative, which pledges to push companies to reduce fossil fuel emissions by 2030 and reach net zero by 2050.

However, to date, Vanguard hasn’t made public any plans to meet these commitments, shows no sign of reducing its holdings in fossil fuels, and lags behind other asset managers in voting for climate-related shareholder resolutions. A recent report from the Action Center on Race and the Economy shows that Vanguard’s ESG funds — which are supposed to select specific stocks for socially conscious investors — are not as fossil-fuel-free as its clients are led to believe.

It’s not enough to merely offer “green” options to individual investors who wish their portfolios to reflect their personal values. Vanguard, which controls trillions of dollars across the economy, needs to move away from enabling destructive climate change and instead ensure a livable future for all of us — our children and their children, too.

Eric Moss is a husband and father of two from Abington and teaches molecular biology at Rowan University in New Jersey.