Vanguard’s Actively Managed ESG Funds Open Door to Oil Majors

Vanguard Group Inc. will for the first time offer actively managed ESG funds in Europe, in a move that brings fossil-fuel companies with credible decarbonization strategies into the asset manager’s sustainable-fund mix.

The $8.4 trillion investing giant says the new funds will exclude investments in companies judged to have a “negative impact on society.” However, the active funds will apply a more flexible exclusion approach than Vanguard’s passive products, Fong Yee Chan, head of the firm’s ESG strategy for Europe, said in an interview on Wednesday.

Until now, Vanguard funds focused on environmental, social and governance themes have been ...