Vanguard, one of the world’s largest investment managers, released its updated proxy voting policy for U.S. portfolio companies, which included less prescriptive language on board diversity expectations for companies.

While the updated policy guide includes a similar explanation to prior years that Vanguard “look for boards to be fit for purpose by reflecting sufficient breadth of skills, experience, perspective, and personal characteristics (such as age, gender, and/or race/ethnicity),” it no longer included as an explicit factor for funds to consider that board should “at a minimum, represent diversity of personal characteristics, inclusive of at least diversity in gender, race, and ethnicity on the board,” that had been included in recent years’ policies.

The new policy also changed language calling for race and ethnicity disclosure, from “disclosure of directors’ personal characteristics (such as race and ethnicity)” in last year’s policy to “disclosure to provide an understanding of the directors’ personal characteristics to enable shareholders to understand the breadth of a board’s composition.”

The changes come as Diversity, Equity and Inclusion initiatives by companies and investors in the U.S. are coming increasingly under fire over the past few years, and particularly since the election of Donald Trump as President.

Several companies have recently announced major adjustments to their DEI policies, following a Supreme Court ruling in 2023 that struck down Harvard’s use of race-based affirmative action criteria in college admissions, and led to increased scrutiny over the legality of key aspects of corporate DEI policies.

More recently, several U.S. state Attorneys General warned a series of Wall Street firms of potential legal actions over their DEI and climate investing policies and practices, including “discriminatory board quotas,” referring to proxy voting guidelines that included diversity requirements, although Vanguard was not addressed in the initiative.

In a statement provided to ESG Today, a Vanguard spokesperson said that the updated policies “reflect the evolving regulatory landscape across local markets,” but noted that they “do not represent significant year-over-year changes.”

The spokesperson said:

“Vanguard is an independent asset manager owned by the investors in our funds, and our proxy voting policies are singularly focused on corporate governance practices associated with long-term shareholder returns.”