ESG investing at Vanguard

ESG investing at Vanguard

Learn more about ESG investing and Vanguard's suite of ESG products--active and index

For financial advisor and institutional use only.

What is ESG investing?

Environmental, social, and corporate governance (ESG) is an investment-related activity that accounts for some type of ESG consideration.

Screening

Investment screening The inclusion in or exclusion from a portfolio of certain sectors, companies, or practices based on specific ESG criteria or minimum standards of practice (norms-based). Currently employed by Vanguard.

Impact investing ESG

ESG integration

Impact investing Targeting specific social or environmental outcomes alongside financial returns, either through private or public investments. Not currently employed by Vanguard.

ESG integration Systematic inclusion of financially material ESG information (risks and opportunities) to complement standard investment analysis. Currently employed by Vanguard.

Investment stewardship The use of shareholder power to influence corporate behavior, including direct corporate engagement, and proxy voting.

We believe that good governance and effective stewardship can add value over the long term for all shareholders. Vanguard's Investment Stewardship program remains grounded in our four principles of good governance: board composition, oversight of strategy and risk, executive compensation,and governance structures.

Vanguard's ESG product lineup

ESG screening/Index

FTSE Social Index Fund

AdmiralTM shares: VFTAX Market-cap-weighted U.S. mid- and large-cap index

Number of holdings: approx. 500 Expense ratio: 0.14%

ESG U.S. Stock ETF

ESGV Market-cap-weighted U.S. all-cap index

Number of holdings: approx.1,500 Expense ratio: 0.12%

ESG International Stock ETF

VSGX Market-cap-weighted international all-cap index

Number of holdings: approx. 3,000 Expense ratio: 0.15%

Vanguard votes proxies for ESG portfolio securities.

Excludes: ? A lcohol, tobacco, gambling, and adult entertainment ? Civilian, controversial, and conventional weapons ? N uclear power ? Gender diversity and equal opportunity challenges ? Human rights, labor, or environmental controversies

Excludes: ? A lcohol, tobacco, gambling

and adult entertainment ? C ivilian, controversial, and

conventional weapons ? Nuclear power ? F ossil fuel companies

(oil, gas, and coal)

Excludes: ? A lcohol, tobacco, gambling

and adult entertainment ? C ivilian, controversial, and

conventional weapons ? Nuclear power ? F ossil fuel companies

(oil, gas, and coal)

? Companies involved in corruption controversies

? Gender diversity and equal opportunity challenges

? Violations of labor rights, human rights, and environmental issues as defined by UN Global Compact Principles*

? Companies involved in corruption controversies

? Gender diversity and equal opportunity challenges

? Violations of labor rights, human rights, and environmental issues as defined by UN Global Compact Principles*

* For more information, go to what-is-gc/mission/principles

ESG integration/Active

Vanguard Global ESG Select Stock Fund

Admiral shares: VESGX Investor shares: VEIGX

Actively managed global large-cap fund

Number of holdings: 40?50

Admiral expense ratio: 0.45% Investor expense ratio: 0.55%

Wellington Management Company LLC votes proxies for ESG portfolio securities.

? N o front-end exclusionary screen

? B ottom-up security selection utilizing proprietary investment and ESG research analyst teams at Wellington Management Company

? S eeks companies that have both fundamental investment characteristics and leading ESG practices

? W ellington actively engages with management teams of companies in which it invests

? Long-term and low turnover ? Highly selective, concentrated portfolio ? Lower volatility and beta with

defensive investment profile relative to FTSE All-World Index ? May own companies in sectors traditionally excluded by screening approaches (i.e., energy)

Connect with Vanguard? >

Financial advisors should visit advisors. or call 800-997-2798. Institutional investors should visit institutional. or call 800-523-1036.

For more information about Vanguard funds, to obtain a prospectus or, if available, a summary prospectus, contact Vanguard using the information provided below. Investment objectives, risks, charges, expenses, and other important information about a fund are contained in the prospectus; read and consider it carefully before investing. Vanguard ETF Shares are not redeemable with the issuing Fund other than in very large aggregations worth millions of dollars. Instead, investors must buy and sell Vanguard ETF Shares in the secondary market and hold those shares in a brokerage account. In doing so, the investor may incur brokerage commissions and may pay more than net asset value when buying and receive less than net asset value when selling. All investing is subject to risk, including possible loss of principal. Expense ratio data are as of March 31, 2019.

P.O. Box 2900 Valley Forge, PA 19482-2900 ? 2019 The Vanguard Group, Inc. All rights reserved. Vanguard Marketing Corporation, Distributor of the Vanguard Funds. U.S. Pat. Nos. 6,879,964; 7,337,138; 7,720,749; 7,925,573; 8,090,646; and 8,417,623. INPESGOP 052019

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