This new edition sets out Ethos' expectations regarding the sustainability reports of companies listed in Switzerland, which will have to be submitted to a shareholder vote from 2024 onwards. It also rein-forces Ethos' demands on the chairperson of the boards of companies with high CO2 emissions. In future, Ethos will be more demanding in approving their re-election based on their management and supervision of sustainability and climate issues.

As it does every year, the Ethos Foundation has updated its voting guidelines to take into account recent developments in corporate governance and sustainability, as well as changes in the legal framework. This document is essential as it forms the basis for all Ethos' analyses and voting recommendations at general meetings.

This year, the changes are mainly related to the new regulatory requirements for corporate non-financial reporting. From 2024 onwards, the largest Swiss listed companies will have to disclose a sustainability report and submit it to their shareholders for approval. New specific requirements for climate reporting will also come into force the following year. 

Criteria set already in 2022

While Ethos had already set out its criteria for approving a sustainability and/or climate report in its 2022 voting guidelines, this new edition allows it to clarify its requirements. For a sustainability report to be approved, it must therefore be drawn up in accordance with a recognised standard, such as GRI, and the key indicators must be verified by an independent third party (with at least limited assurance). It must also be based on a recent assessment of material issues, with quantitative indicators, and contain ambitious and quantitative targets for these issues. Finally, it must be available sufficiently in advance of the AGM. 

With regard to the climate report or roadmap, CO2 emissions must be published in accordance with the GHG protocol and cover all direct emissions (scope 1 and 2) as well as indirect emissions (scope 3) as comprehensively as possible. The reduction targets must be compatible with a global warming of 1.5°C and have been verified - or are in the process of being validated - by a recognised body such as SBTi. The company must also publish interim quantitative targets covering at least 80% of its emissions and explain the measures taken to achieve these targets. Finally, it must publish its progress against these targets and update its climate strategy at least every three years.

Reinforced expectations for board members

This new edition of the proxy voting guidelines also enables Ethos to reinforce its expectations of the chairperson of the boards of directors of companies with high CO2 emissions. Ethos will be more demanding in the future and will oppose their re-election if the company does not have a sustainability committee, if it does not provide for a vote on the climate report and if it has not implemented a convincing climate strategy. 

Ethos will also oppose the re-election of a board chairperson who has failed to make improvements following a strong shareholder protest at a previous AGM. “Boards of directors, and their chairperson in particular, are responsible for corporate strategy," says Vincent Kaufmann, CEO of Ethos. “They must therefore be sanctioned when this strategy is deemed unsatisfactory, particularly with regard to the management of environmental and climate issues.”

Finally, Ethos believes that the largest greenhouse gas emitters based in Switzerland should no longer limit themselves to a single vote on sustainability, but will have to organise two separate votes: one on the sustainability report and the other on the climate report or roadmap. This will give shareholders a regular opportunity to express their views on the company's climate strategy and, above all, on its practical effects and the adjustments that need to be made over the years. Voting on the climate report is essential to measure the progress companies are making towards their objectives and to ensure that concrete measures are put in place. There is a significant risk that companies will rely mainly on financing carbon sinks to meet their climate objectives, with-out questioning their business model and the investments required for the transition.

***The English version of the guidelines will be available in January 2024 on Ethos' website***

Main changes compared to the 2023 edition

Ethos proxy voting guidelines 2024 (in French)

Ethos proxy voting guidelines 2024 (in German)

General meetings
Corporate Governance