The world’s second-largest fund manager is to allow investors to vote based on criteria that prioritise profits over politics or social agendas.

Vanguard has introduced the category as part of an expansion of its Investor Choice pilot programme, which has been testing technology that allows individual investors to vote instead of the fund manager voting on their behalf according to proxy advice.

The profit-priority voting has been added just weeks before Donald Trump is to return to the US presidency. In recent years, Republicans have taken to denigrating ESG as “woke capitalism”, while some Republican states challenged fund managers with demands to stop using ESG as investment criteria. Earlier this year, the Securities and Exchange Commission was forced to halt the introduction of new climate risk reporting rules after it was challenged in the courts.

Vanguard’s global head of investment stewardship, John Galloway, says the Investor Choice programme is “grounded in the foundational belief that empowering investors to influence how their proxies are voted helps create a healthier corporate governance ecosystem”.

The new “wealth-focused policy” allows asset owners to vote in a way that “focuses on maximising shareholder value without being influenced by political or social agendas”.

Galloway says: “Guided by our mission and legacy of taking a stand for investors, we are committed to continuing to expand Investor Choice in a thoughtful, straightforward and efficient way so that more and more investors can make their voices heard.”

According to Reuters, only 2% of eligible investors had opted into Investor Choice for the 2024 proxy season.

Vanguard is using a “wealth-focused” policy developed by Egan-Jones, a proxy advisor. The policies, contained in its 2023 document, mean voting against shareholder proposals that request sustainability reports or nomination of an environment expert for the board, as well as many other social and environmental issues.

Explicit “no politics or social agenda” investment criteria plays into a debate in the US that has raged since the 2016 election, when those campaigning on the right targeted environmental and social governance concerns for criticism.

Fund managers in particular were attacked, so much so that Larry Fink, chief executive of BlackRock, the world’s largest asset manager, announced last year that the term ESG had been “weaponised” in investment and the firm would no longer use it in its materials.

Elon Musk weighed into the discussion last year when he criticised proxy advisors ISS and Glass Lewis for their influence in recommending votes on environmental and social issues. Musk was responding to a tweet from Vivek Ramaswamy, then an anti-ESG investment manager and author of Woke Inc.

Musk and Ramaswamy have since been appointed by Donald Trump to jointly head up an effort to find efficiencies in the federal government, which many commentators fear could lead to the gutting of many departments.

Trump will take over the White House in January. It appears elements of the business world are beginning to adapt.