I’m getting hardcopy mail from Vanguard index funds. My vote to elect a Board of Trustees is supposedly critical. As with my November vote for Congress, etc., every two years, I know nothing about any of the candidates. What seems to be new this year from Vanguard is a shareholder proposal to “institute transparent procedures to avoid holding investments in companies that, in management’s judgement, substantially contribute to genocide or crimes against humanity, the most egregious violations of human rights.”
A return on investment is nice, but not if it means supporting genocide, right? Wrong! “The Board of Trustees recommends you vote AGAINST the following proposal.”
I’m wondering if this is why Wall Streeters have a public relations problem…
Since the company is operating in a capitalist economy, the board of trustees want to maximize their income and profit, remember, greed is good. I do not think the shareholders that wrote the proposal understand that they live in a capitalist society. Do they realize that many legal companies could be considered to contribute to genocide or crimes against humanity? Companies like Lockheed could be considered to contribute to genocide or crimes against humanity. Oil companies, due to climate change, could also be considered to contribute to genocide or crimes against humanity. Even Philip Morris, a legal manufacture of cancer sticks, could be considered committing genocide. Philip Morris had good stock performance and good dividend in the last couple of years, so it could be a good addition to any stock portfolio. So what would Vanguard Invest in Joe’s organic farm? Almost any large public company could be considered to contribute to genocide or crimes against humanity.
Yes. They were desperate for votes on this proxy. They actually called me to ask me to vote.
It might be hard to follow the index without buying the index, this would turn the index funds into being derivatives or synthetic benchmarks.
Would the war on women in the U.S. today qualify as genocide or crimes against humanity?
I also got this letter and did the vote online. The “The Board of Trustees recommends you vote AGAINST the following proposal.” threw me off as well – I didn’t expect that in this day an age they would write something like that.
Not knowing any of the people in the list, I did a quick google of each person, and ended up voting for all except 2. One was some person who was a highly over paid university president (As a former academic, I cannot help but detest overpaid academic administrators). The other was someone who worked in the Federal Reserve, a colleague of Janet Yellen’s and who was sworn in by Ben “let’s pump the debt to another $10 Billion” Bernanke (gag me with a spoon) the brave man that he is…
It’s because their products are index funds. They measure their performance by how well the track the relevant indexes, not their absolute return.
If they have to not invest in stocks that make up an index, they’re more likely to deviate from their target performance.
If you want to make ethical choices with your investing, invest in a product that specializes in such a thing, or invest in individual stocks.
Vanguard having to change VFINX from “S&P 500” to “S&P 500* (* except companies that our board believes support genocide)” would make their performance much more difficult to measure.
I see how the optics are strange, but it’s not Vanguard’s business to be making ethical choices with their passive investment products.
I’ve been in vanguard funds for ~10 years. This is the first time they have ever called me for a vote. Their first question was if I vote with management (probably easier than explaining the genocide thing). Sounds like they got a poorly worded proposal on the ballot – as other comments have pointed out – what is the definition of genocide. I voted for management. Love the blog!
Genocide is one of those words with an ever-expanding definition. Before long, reading this blog will be considered contributing to genocide.
Correct George. Wall Street has faults and many of its inhabitants are suffering much and may hate everyone because of it but in newspeak ‘substantially contribute to genocide’ means ‘substantiously contribute to preventing genocide’. It also will result in extra managing fees on index funds and eventually re-destribution of cash to useless or maligns companies and causes. We have enough fake humanitarian politicians who propose the same and Uncle Sam does block entities involved in such activities. So even if it is profitable but suisidal to suppprot Iran in its quest for neukes and ICBMs, it is illegal to finance them in the USA (but not in EU).
It’s one of these situations where the language doesn’t mean what you think it means. For example you might think “Human Rights” has something to do with helping people in a tough spot. Any time you see this phrase it actually means covert ops, regime change, assassinations, etc.
BDS?
I thought I was the only one. Vanguard has been desperate for me to vote as well. Now I know why.