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Kentucky AG Cameron claims ‘victory’ over Vanguard’s decision to leave climate initiative

Kyeland Jackson

The asset management firm Vanguard has withdrawn its support from a group committed to reaching net-zero carbon emissions by 2050 following pressure from attorneys general including Daniel Cameron.

Cameron celebrated Vanguard’s decision to withdraw from the initiative on Thursday saying that environmental, social and governance (ESG) investment goals threaten Kentucky’s economy.

“Vanguard’s decision to leave the Net-Zero Asset Managers initiative is a victory for the retirement accounts of hard-working Kentuckians and the energy needs of our Commonwealth,” Cameron wrote in a statement.

In his time as Kentucky’s attorney general, Cameron has repeatedly attacked climate action initiatives in government and the private sector. His office has often joined with other attorneys general to challenge EPA rules reducing smog, setting highway emissions standards and to protect the fossil fuel industry.

Cameron’s office has also used a law passed earlier this year to go after financial institutions boycotting investments in the fossil fuel industry. His office is now facing a lawsuit from the Kentucky Bankers Association over alleged First Amendment violations.

In late November, Cameron joined a dozen attorneys general to protest Vanguard’s application with the Federal Energy Regulatory Commission (FERC) allowing the asset management firm to purchase a significant number of shares of publicly traded utilities.

Essentially, the 13 attorneys general say they are concerned that Vanguard will use its financial power to become an activist investor in the utilities and accelerate goals to reach net-zero emissions.

“Vanguard’s own public commitments and other statements have at the very least created the appearance that Vanguard has breached its promises to the Commission by engaging in environmental activism and using its financial influence to manipulate the activities of the utility companies in its portfolio,” Utah Solicitor General Melissa Holyoak wrote in a FERC filing.

On Wednesday, Vanguard announced that it would withdraw from the Net Zero Asset Managers Initiative (NZAM) — a group of nearly 300 managers controlling more than $66 trillion committed to achieving net-zero emissions by 2050 or before.

“Therefore, after a considerable period of review, we have decided to withdraw from NZAM so that we can provide the clarity our investors desire about the role of index funds and about how we think about material risks, including climate-related risks — and to make clear that Vanguard speaks independently on matters of importance to our investors,” according to a company press release.

Cameron said Vanguard’s decision was an important step in stopping environmental policies that “endanger Kentucky’s economy.”

Climate scientists say humankind has a limited amount of time to reduce global emissions to avoid the worst impacts of climate change. To limit warming to around 1.5 degrees Celsius, greenhouse gas emissions will not only need to peak by 2025, but drop by about half by 2030, with the planet reaching net zero by 2050.

That means the world will not only have to stop investing in fossil fuels, but will have to rapidly transition away from current fossil fuel assets.

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