The Ethos Engagement Pool (EEP), launched in 2004 by Ethos and two pension funds, today consists of 130 institutional investors with AUM of 21 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 environmental and social responsibility.
By joining forces, a large number of 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. In 2017, the dialogue universe will be extended to the 150 largest companies listed in Switzerland, representing more than 99% of the market capitalization of the SPI. A detailed report on the engagement 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: continued progress
Ethos welcomes the improvements in company practice in the field of corporate governance. For example, the combination of the roles of chairman and CEO has almost disappeared and there is a continued progression in the number of female board members, especially in the largest companies.
Regarding the board’s remuneration, the grant of options to board members has all but disappeared. Concerning the executive management, more and more companies replace the long-term remuneration plans in restricted shares with performance based plans. This constitutes a significant improvement of their practice.
Environmental and social responsibility: focus on climate change
In terms of environmental and social responsibility, a dialogue was led on topics such as the existence of corporate codes of conduct and their implementation, the publication of sustainability reports and company strategy with regard to climate change.
While there is regular progress in the area of the publication of codes of conduct, there is still much to do in in terms of environmental and social reporting. In 2016, close to half of the companies did not publish a sustainability report.
Given the urgency of climate change, Ethos gives great importance to the strategy of companies with regard to accounting and reduction of their greenhouse gas emissions. To aid companies in their reflection, Ethos has published an "engagement paper" which was sent in October 2016 to the chairmen of all the Swiss listed companies included in the EEP universe. This document contains 5 investor expectations of companies and will serve as basis for the dialogue between Ethos and the companies in 2017.
