Vanguard Wellington™ Fund is likely to concern sustainability-focused investors given certain substandard ESG attributes.
Vanguard Wellington™ Fund's holdings are exposed to average levels of ESG risk relative to those of its peers in the Moderate Allocation category, thus earning it an average Morningstar Sustainability Rating of 3 globes. Competing funds in the category with ratings of 4 or 5 globes have less ESG risk in their holdings. ESG risk provides investors with a signal that reflects to what degree their investments are exposed to risks related to material ESG issues, such as climate change and inequalities, that are not sufficiently managed. ESG risk differs from impact, which is about seeking positive environmental and social outcomes.
Vanguard Wellington™ Fund has a Carbon Risk Score of 7.70, indicating portfolio companies face low carbon-related risks in the transition to a low-carbon economy.
One potential issue for a sustainability-focused investor is that Vanguard Wellington™ Fund doesn’t have an ESG-focused mandate. Funds with an ESG-focused mandate would have a higher probability to drive positive ESG outcomes. Currently, the fund has 10.03% involvement in fossil fuels, which is higher than 9.69% for the average peer in its category. Companies are considered involved in fossil fuels if they derive some revenue from thermal coal, oil, and gas. The fund exhibits relatively high exposure (9.32%) to companies with high or severe controversies. Companies with high or severe controversies may be involved in incidents such as corruption, employee abuses, environmental incidents, and corporate scandals that pose serious business risks to the company.