The Ethos Foundation in Switzerland has set stricter conditions for the next proxy voting season to support or oppose corporate governance structures of listed companies, looking at the mandates held by members of board of directors, and diversity.
The pension funds-backed foundation will oppose the election or re-election of a member of a board of directors if the person holds more than four mandates, down to five allowed previously, Ethos said in the new guidelines published this week, adding that the chair’s counts double.
Ethos will also oppose the re-election of the chair of a nomination committee, or of a board of directors if there is no such committee, if the share of women on the board is at least 30%, it added.
“Crises, disruptive technologies, sustainability or digital responsibility issues and changes in the various transitional, legislative or physical risks require board members to be more available and more responsive”, said chief executive officer Vincent Kaufmann.
The situation in terms of diversity on the board of directors of Swiss companies is “worrying”, Ethos said.
Swiss companies have five years, until January 2026, to meet the 30% quota for women on their boards, but a study conducted by Ethos has shown that 56.4% of the companies listed on the Swiss Performance Index (SPI), the benchmark for the overall Swiss equity market, have not yet reached the quota, and 36 companies still don’t have women on their boards.
From this year, companies listed on the Swiss stock exchange with more than 500 employees are required to put their sustainability reports to a mandatory vote at annual general meetings (AGMs).
Ethos said it has tightened the requirements to approve sustainability reports next year, looking closely at transparency and at sustainability strategies.
This is a result of a lesson learned during this year’s AGM season, when several companies refused to disclose key indicators, and others abandoned commitments regarding their sustainability strategies, it said.
Next year, Swiss companies are required to publish a climate report, and they may propose a specific vote on their climate reports.
Ethos will oppose climate reports if they have not been drafted according to “recognised standards” covering climate change topics, or if a company has not yet set CO2 emission reduction targets to keep global warming in check, covering at least 80% of direct and indirect emissions, it said.
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