The Swiss Asset Management Association (AMAS) and the group Swiss Sustainable Finance (SSF) have launched the Swiss Stewardship Code, providing the Swiss asset management industry with guidance to encourage the active exercising of shareholder rights by investors in Switzerland.
The principles, published today and drafted with the support of pension funds and asset managers, includes recommendations on governance, stewardship, voting, engagement, escalation, monitoring of investee companies, delegation of stewardship activities, conflicts of interest, and transparency and reporting.
Governance is intended as an internal mechanism to monitor an effective stewardship of investors and service providers, that remain accountable for their actions. A governance structure should support stewardship policies, according to the code.
The code recommends investors and service providers to disclose information on voting process and decisions at annual general meetings (AGMs). Asset owners remain responsible for decisions, also when outsourcing voting to third-party service providers or to asset managers.
Investors and service providers should define their engagement approach, key performance indicators (KPIs), topics and outcomes of dialogues with companies, but also with public stakeholders and policymakers, it said.
Public policy engagement through organisations, for example trade associations, can help change public policies, promote good corporate governance, protect shareholder rights or address environmental and social issues, according to the code.
Investors can also escalate their actions if engagement does not pay off, for example against a specific board member, presenting one or more nominations for board election, or divesting.
Additionally, they should manage conflict of interest arising with service providers and asset managers, disclosing stewardship policies and activities to beneficiaries.
The Stewardship Code is aligned with the Global Stewardship Principles of the International Corporate Governance Network (ICGN), the Principles for Responsible Investment (PRI) and the UK Stewardship Code, together setting an international benchmark for investors’ stewardship activities, AMAS and SSF said in a statement.
Sabine Döbeli, chief executive officer of SSF, said: “With the new stewardship code, SSF and AMAS are helping Swiss financial players communicate their goals to companies and encourage them to adopt more sustainable business models and create long-term value.”
AMAS’ CEO Adrian Schatzmann added: “From an investor’s perspective, stewardship protects and increases the long-term return on financial investments and is therefore a core element of asset managers’ fiduciary duty.”
Aligning corporate sustainability with EU standards
The Swiss government (Federal Council) has listed key points to consult on a new version of the corporate sustainability reporting to align Swiss laws with those in force in the EU.
One key point relates to the obligation of companies with 250 instead of 500 employees, to provide sustainability reporting.
The government has taken note of recent regulatory developments in the European Union, looking closely to the Corporate Sustainability Reporting Directive (CSRD) that entered into force in January.
Similar to the EU, companies in Switzerland with 250 employees should report on the risks of their business activities for the environment, human rights and the fight against corruption, and measures taken to deal with those issues, the government explained.
Only companies that reach the threshold of 250 employees for two years in a row are affected by the reporting obligation. Today, this obligation only applies to companies with 500 or more employees.
Moreover, corporate reporting will have to be checked by an external auditor. In contrast to the EU, companies in Switzerland can choose whether to follow EU standards or another equivalent standard, for example the OECD standard, for corporate sustainability reporting.
The Federal Council also plans to assess in detail the so-called third country regulation to understand whether foreign companies operating in Switzerland are automatically subject to Swiss law, it said.
The Swiss government is currently analysing in more detail the effects of the planned EU directive on Swiss companies. The analysis is expected to be available by the end of 2023, it added.