Policies and guidelines

Proxy voting policy for Brazilian portfolio companies

09 March 2022

This document describes the general positions of the Vanguard funds on recurring proxy proposals for Brazilian-domiciled companies. Effective April 1, 2022. Download the Portuguese language version.

Proxy voting policy for Canadian portfolio companies

09 March 2022

This document describes the general positions of the Vanguard funds on recurring proxy proposals for Canadian-domiciled companies. Effective April 1, 2022. Download the French language version.

Proxy voting policy for Japanese portfolio companies

09 March 2022

This document describes the general positions of the funds advised by Vanguard on recurring proxy proposals for Japanese-domiciled companies. Effective April 1, 2022. Download the Japanese language version.

Proxy voting policy for Mexican portfolio companies

09 March 2022

This document describes the general positions of the Vanguard funds on recurring proxy proposals for Mexico-domiciled companies. Effective April 1, 2022. Download the Spanish language version.

Global Investment Stewardship principles

November 2021

Vanguard believes there are fundamental, universal corporate governance principles with which all companies should align. This document describes our four principles of good governance.

Proxy voting policy for European and UK portfolio companies

13 January 2022

Our general proxy voting policy (effective February 1, 2022) that applies to all European-domiciled companies, followed by country specific policies for the UK, Ireland, the Crown Dependencies (Jersey, Guernsey and the Isle of Man) and Germany.

Proxy voting policy for U.S. portfolio companies

13 January 2022

This document outlines the general proxy voting policies for each Vanguard fund (effective March 1, 2022). Primary updates from our 2021 policy include committee independence, director capacity, board oversight failings, and hybrid/virtual meetings.

Australia and New Zealand proxy voting policy

06 October 2021

Our general proxy voting policy that applies to all companies domiciled in Australia and New Zealand. The effective date of the policy is October 1, 2021.

Engaging with Vanguard: A guide for company boards and management teams

During the last proxy season, Vanguard's Investment Stewardship team voted at more than 18,000 company meetings. Here is a quick guide on how to set up an engagement with our team.

Vanguard's Engagement Policy

This policy generally describes how Vanguard's Investment Stewardship team engages with issuers with respect to proxy voting and governance across the globe.

Policy overview

At Vanguard, our core purpose is "to take a stand for all investors, to treat them fairly and to give them the best chance for investment success". To guide us in this mission, we rely on our core values of integrity, focus and stewardship in every decision we make. Vanguard's ownership structure in the United States means integrity is foundational to our character as an organisation. The Vanguard Group is owned by Vanguard's US-domiciled funds. Those funds, in turn, are owned by their investors. This unique mutual structure aligns our interests with those of our investors and drives the culture, philosophy and policies through the Vanguard organisation worldwide. Our long-term perspective and disciplined approach to investing puts our focus squarely on clients and the sustainable value of their investments. Our stewardship is reflected in a commitment to keep costs low and to protect our clients from undue risk. We believe responsible investment is inherently part of Vanguard's culture and is consistent with our fiduciary duty to manage investments in the best interest of clients.

Vanguard supports responsible investment by:

  • Voting in support of proxy proposals that, in our view, will improve our clients' long-term investing outcomes.
  • Advocating for responsible corporate governance, particularly with the companies in which we invest, as a driver of long-term value creation.
  • Acting on material environmental, social and governance (ESG) opportunities or risks in our investments.

Proxy voting

The most visible sign of Vanguard's engaged ownership is our funds' proxy voting at shareholder meetings. We have an experienced group of analysts on our Investment Stewardship team that evaluates proposals and casts our funds' votes in accordance with our voting guidelines. Our guidelines are designed to promote long-term shareholder value by supporting good corporate governance practices. They frame the analysis of each proxy proposal, providing a basis for decision-making. In evaluating votes, the Investment Stewardship team may consider information from many sources, including company management, shareholder groups and various research and data resources. We periodically review our voting guidelines to consider further developments in governance standards or risks to long-term shareholder value.

Advocating through engagement

Our funds typically hold companies' stock for long periods of time, and in the case of index funds, we are near-permanent investors. We believe good corporate governance is key to helping these companies maximise returns over time, and we view effective management of environmental and social risks as an integrated component of good corporate governance practices. Significant analysis and effort are put into discussions with the directors and managers of the companies in which we invest; the level and frequency of these discussions may be influenced by the material impact to our funds and the contentiousness of the issue. We believe these engagements, more so than voting, provide an opportunity to fully understand issues and target feedback and messaging to companies.

We characterise our approach as "quiet diplomacy focused on results" – providing constructive input that will, in our view, better position companies to deliver sustainable value over the long term for all investors.

We have a well-established process for identifying governance risks in our portfolio companies. Our key areas of focus for engagement include:

  • A well-composed, independent, capable and experienced board.
  • Governance structures that empower shareholders.
  • Sensible remuneration that incentivises long-term performance.
  • The board's oversight of company strategy and material risks

Furthermore, Vanguard promotes good corporate governance and responsible investment through thoughtful participation in industry events and discussions where we can expand our advocacy and enhance our understanding of investment issues. We also engage with index providers to understand the methodology, construction and maintenance of various equity indices. Finally, we actively contribute to the development of regulatory policy with other market stakeholders to raise standards and promote best practices around the globe.

Acting on environmental, social and governance (ESG) opportunities and risks in our investments

Fixed Income Group

Our actively managed fixed income mandates are supported by a global team of credit analysts that develops independent risk assessments and investment opinions for each fixed income issuer. The team seeks to understand the material implications of ESG risk as part of an overall independent risk assessment and to determine whether or not market pricing adequately reflects those risks. Focus is placed on consistently applying an ESG integration framework to our investment decision-making process and working with issuers to better understand risks and how improvements can be made to address them.

Equity Index Group

The majority of our global investments, including most of our equity mandates, seek to track an index. Index providers determine the benchmark constituents, which may not take into account ESG risk when selecting or retaining investments. Our global product line-up includes a number of funds designed to track indices that exclude companies that do not meet social responsibility criteria specified by the index provider.

Portfolio Review

The Portfolio Review team is responsible for the ongoing oversight of our external managers, as many of our active funds use external advisers to manage investments. The team's manager search and oversight process focuses on understanding the drivers of investment performance and a firm's ability to sustain investment success over the long term. Multiple inputs are considered when assessing an investment manager, including the firm's culture, ethics and stability; the skill and depth of the investment team; the investment philosophy and process; and the firm's ability to implement its investment process while managing risk effectively. The team engages with our external investment managers periodically to review their practices to better understand how ESG factors inform the investment process. Additionally, we retain documentation of each manager's responsible investment or ESG policy to help monitor improvements, developments and changes over time.

Oversight and disclosure

The integration of ESG in Vanguard's investment and engaged ownership practices is currently overseen by the Investment Stewardship Oversight Committee, which consists of our chief executive officer and select senior officers of Vanguard. Day-to-day management of ESG integration is supported by a cross-functional team representing those groups that regularly evaluate and address environmental, social and governance risks across our product line-up.

Ongoing review of policies and practices

We will continue to adapt and evolve our approach to responsible investment as we uncover new risks and issues affecting our investments. Our policy, and other departmental guidelines and practices, will be revisited on a regular basis. Any updates will be disclosed on Vanguard's external website and through other relevant channels.