By Ross Kerber
(Reuters) – Top mutual fund manager Vanguard removed some of its guidance for U.S. companies to include women and minority directors, a sign of the shifting dynamics of corporate diversity efforts that have come under attack from the new Trump administration.
With $10.1 trillion in assets under management, any change in Vanguard’s guidance will be closely followed as the 2025 annual shareholder meeting season gets going in March.
Vanguard’s proxy voting policy for U.S. companies, seen by Reuters ahead of a Friday release, has removed a statement from its 2024 policy that in addition to having a diversity of tenure and skills, a board should also, “at a minimum, represent diversity of personal characteristics, inclusive of at least diversity in gender, race, and ethnicity.”
Vanguard said the change aims to account for regional standards, such as a UK expectation that 40% of directors be women. There is no equivalent U.S. requirement and Nasdaq has ended an effort to require corporate diversity disclosures.
Vanguard does not have hard targets for who should serve as directors and is only trying to provide clarity, said John Galloway, Vanguard’s global head of investment stewardship.
“We have never had quotas, and in the first instance look for boards to follow the listing standard and market expectations of the markets they are in,” he said.
Vanguard’s guidance for U.S. companies continues to include other language supportive of boardroom diversity, such as that boards should reflect a range of “personal characteristics (such as age, gender, and/or race/ethnicity)” to enable better oversight for shareholders.
Executives across all industries are facing pressure to drop diversity, equity and inclusion policies, with President Donald Trump issuing a series of executive orders aimed at dismantling DEI programs since taking office on Jan. 20.
Meanwhile, investors so far have stood by the policies such as those at Costco where 98% of votes cast rejected an anti-DEI resolution on Jan. 23.
Boardrooms have slowly grown more representative since the Black Lives Matter movement of 2020, but gains for women and minorities are slowing as companies reach goals and look at other recruiting priorities.
Vanguard rival BlackRock, in its 2025 guidance, eliminated a 30% diversity target for boards from late 2021, noting that 98% of S&P 500 boardrooms already meet that goal.
Various Republican officials have accused both Vanguard and BlackRock of putting too much emphasis on environmental, social and governance (ESG) concerns, while the companies say they prioritize returns.
Vanguard for instance did not back any of 400 environmental or social shareholder resolutions last year in the U.S., and the new domestic guidance also removes examples of such resolutions it might support, a move Galloway said was meant to avoid confusion.
“We’re trying to provide clarity to people who have concerns, whether they are pro-ESG or anti-ESG,” Galloway said.
(Reporting by Ross Kerber; Editing by Himani Sarkar)
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