Pension funds-backed Ethos Foundation has reviewed its guidelines to vote at annual general meetings (AGMs) next year in line with new laws, specifying criteria to vote on sustainability and climate reports of companies, it announced today.

Listed companies are required from next year by the Swiss Code of Obligations to prepare a sustainability report and submit it to a shareholder vote.

Ethos will give its approval to sustainability reports if they are drafted according to established and recognised standards, for example those of the Global Reporting Initiative (GRI), if verified by an independent third party, and if they include a recent assessment of material issues using quantitative key performance indicators, it said.

It will also vote in favour of companies that set “ambitious and quantitative targets” for material issues, and will ask to make reports available to shareholders sufficiently in advance of general meetings, it said.

Ethos will also demand large greenhouse gas emitters to submit a climate report for voting, including details on CO2 emissions, with reduction targets verified, or in the process of being validated, by a recognised body, for example Science Based Targets initiative (SBTi), that have set interim reduction targets, disclosing the plan to reach climate goals, and publishing a report on the progress made towards reaching climate objectives, it said.

Its guidelines will oppose the re-election of chairs of boards of directors of companies generating a high level of CO2 emissions without a sustainability committee, refraining from putting a climate report to vote, and that have not put in place a convincing climate strategy.

The vote against the re-election of a chair of boards of directors fits into a wider strategy aiming to make boards of directors more accountable for their actions, the guidelines noted.

Ethos will also oppose the re-election of a chair of a board of directors when enough improvements are not made on a topic that was “strongly contested” at a previous AGM, it added.

The new voting guidelines take into account laws including the Swiss Ordinance on Climate Disclosures on double materiality disclosures for companies, the Swiss Code of Best Practice for Corporate Governance, the Swiss Stewardship Code and the Corporate Governance Directive of the SIX Swiss Exchange.

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