The Ethos Engagement Pool (EEP), launched in 2004 by Ethos and two pension funds, today consists of 125 institutional investors with AUM of 17 billion CHF in Swiss equities. United around Ethos, these institutional investors are convinced that engaging with companies is an efficient means for sensitizing them to best practice in corporate governance and sustainability.
By joining forces, the institutional investors sharing an interest for sustainability questions, aim to enhance the long term value of the company for all its stakeholders. The choice of topics is made each year by the members of the EEP. The dialogue universe (120 largest listed Swiss companies in 2015) will be extended to the largest 140 in 2016. A detailed report on the dialogue activities is delivered to the members of the pool every year. A short version of the report which summarizes the main topics and results of the dialogue is available on the Ethos website.
Corporate governance: progress on all fronts
Ethos welcomes the improvements in company practice in the field of corporate governance, such as the composition of the board, the transparency of the remuneration reports, political and philanthropic donations as well as the authorized capital increases without preemptive rights.
In 2015, the ordinance of application of the Minder initiative (ORAb) allowed for a number of discussions with companies over the implementation of several of these new rules. Ethos notes that important progress has been made in transparency and remuneration structure. However, efforts are still needed to better align management and stakeholder interests especially as concerns payouts and pay-for-performance.
Environmental and social responsibility: intense dialogue
In terms of environmental and social responsibility, an intense dialogue was led on topics such as the existence and the implementation of corporate codes of conduct, the publication of sustainability reports, climate change strategy and sustainable supply chain management. Companies have become conscious of the importance of these topics, but a number of them still publish too little or no information. Ethos is convinced that a good sustainability strategy coupled with reporting is necessary for stakeholders to assess how a company is managing its risks and opportunities.
In 2015 a particular accent was put on climate change. Ethos notes that less than half of the companies in the dialogue universe publish their greenhouse gas emissions. In terms of reduction goals, only few companies have committed to reaching goals compatible with a maximum global warming of 2° or to putting in place an internal price on carbon to measure returns on investment projects.
