Shai began his career on the buyside at what is now JP Morgan AM, before moving to the sellside where he worked in several research roles. He was Head of Research at Macquarie Group for 10 years before founding Integrum ESG in 2018. Shai has an M.A. in English from Cambridge University.
Vanguard Investments Australia were fined a record A$12.9 million ($8.9 million USD) penalty for misleading sustainable investment claims.
The Vanguard Ethically Conscious Global Aggregate Bond Index Fund followed the Bloomberg Barclays MSCI Global Aggregate SRI Exclusions Float Adjusted Index, which Vanguard claimed excluded issuers with significant activities in areas including fossil fuels, alcohol and tobacco.
This was not the case, with the court finding that approximately 74% of the securities in the fund were not properly researched or screened against applicable ESG criteria, exposing investors to investments they would reasonably expect not to be included within the fund.
The lesson to be learned remains the same.
As an investor, if you base your product on an index where exclusions or inclusions are based on 'guesstimated' ESG data, then unless you have made this methodology crystal clear to investors, you are the ones in regulatory jeopardy.
You cannot hide behind index providers.
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