Shareholder Series: Guard Us from Vanguard
Malvern, Pennsylvania – a grey, soulless morning in the suburbs outside Philadelphia. The kind of place where dreams go to die quietly, smothered under a blanket of beige office parks and strip malls. Here sits the headquarters of The Vanguard Group. A fortress of finance, a trillion-dollar titan that claims to champion the little investor. Low fees, passive funds, a co‑op structure that says it puts clients first. Sounds noble, right? Until you scratch the surface.
Vanguard: People’s Champion or Devil in Sheep’s Clothing?
Vanguard once joined the Net Zero Asset Managers initiative but quit in December 2022, citing a desire for “independence” from what critics call meaningful climate action (aljazeera.com). Yet it still holds hundreds of billions in fossil fuel equities. Texas’s Attorney General sued Vanguard (alongside BlackRock and State Street) in late 2024, alleging collusion to manipulate energy markets and inflate costs for consumers (texasattorneygeneral.gov).
Customer service woes persist. Vanguard CEO Tim Buckley admitted in early 2023 that the digital experience was “antiquated” and that NPS scores were slipping due to tech issues (ritholtz.com). Investors endured slow transfers and clunky interfaces while competitors advanced.
Vanguard’s target-date fund saga inflicted real harm. In July 2022, Vanguard agreed to pay about £5 million (€6.25 million) in restitution to Massachusetts investors after unexpected capital gains taxes from fund changes (reuters.com)Then in January 2025 it settled SEC charges for £85 million ($106.41 million) over misleading statements on capital gains distributions and tax consequences for taxable accounts (sec.gov).
Cummins: Diesel, Deceit and a Cloud of Smoke
Now, Columbus, Indiana. Cummins Inc., a diesel-engine behemoth, has its own rap sheet. In late 2023, it agreed to pay a $1.675 billion penalty under the Clean Air Act for installing defeat devices that bypassed emissions tests (epa.gov). That was the largest civil penalty in Clean Air Act history. This echoed an earlier 1998 settlement of $83.4 million over similar violations (epa.gov). For a company pulling in over $30 billion in revenue, these fines are often just a cost of doing business.
The Nexus: Titans Collide
What links Vanguard and Cummins? As of March 2025, Vanguard held about 17.28 million Cummins shares – roughly 12.55% of total shares outstanding, making it one of the largest shareholders (nasdaq.com). That stake gives Vanguard influence and a duty to its investors. Yet Vanguard’s ESG track record shows it often opts for minimal action when profits are at stake. Cummins repeatedly flouts environmental and ethical standards. The question for Vanguard: press Cummins to reform or keep counting dividends while the planet suffers?
Bottom Line
Vanguard and Cummins exemplify a deeper system where profit trumps principle. Vanguard wraps itself in low-cost investing but funds industries that worsen climate risk. Cummins pays fines but continues practices critics expose. If you invest, know who you’re backing. Demand more accountability or move your money.
Lee Thompson – Founder, The Cummins Accountability Project
Key citations used above:
- Vanguard quits Net Zero Asset Managers initiative in Dec 2022 aljazeera.com.
- Texas AG sues Vanguard over alleged collusion in energy markets (Nov 2024) texasattorneygeneral.gov.
- Tim Buckley on antiquated digital experience (Feb 2023) ritholtz.com.
- Vanguard pays $6.25M restitution to Massachusetts investors (July 2022) and $106.41M SEC settlement (Jan 2025) reuters.comsec.gov.
- Cummins pays $1.675B Clean Air Act penalty (late 2023) epa.gov.
- Cummins earlier $83.4M 1998 penalty for defeat devices epa.gov.
- Vanguard holds ~17.28M Cummins shares as of 31 Mar 2025 nasdaq.com.