Swiss pension funds have expressed disappointment on how companies’ management boards handle disclosure on sustainability issues, as a survey by Swiss consultancy SWIPRA showed.
Only 11% of pension funds and 16% of institutional asset managers consider sustainability reports from companies “sufficiently informative”.
The research also showed that 61% of the pension funds surveyed demand detailed information on environmental topics and 90% of institutional asset managers say they are lacking information on the strategic relevance of sustainability topics at corporate level.
The survey, conducted in partnership with the Institute of Banking and Finance at the University of Zurich, showed that the majority of shareholders (71%), and 53% of companies, would prefer minimum legally required ESG reporting standards, it added.
Engagement strategies show to have an impact, with 59% of the companies included in the survey stating to have changed their structures as a result of dialogue with stakeholders.
Votes at annual general meetings (AGMs) on non-financial reporting (NFR), expected to become legally required in Switzerland by 2024, are considered “useful” by 81% of the shareholders and by 58% of the companies, according to the surveym which also showed that 73% of shareholders and 92% of companies would opt for a non-binding vote on NFR.
From the point of view of the shareholders, companies’ boards do not take sufficient responsibility in dealing with environmental and social (E&S) topics, making it unclear the extent of the integration of these aspects into strategic decisions, business models, compensations, leadership and board composition or capital allocation, including investments in new technologies.
Only 31% of the institutional shareholders taken into account in the survey think that companies’ boards assume sufficient responsibility for E&S.
Additionally, 81% of shareholders and 86% of companies would establish a form of compensation based on ESG performance as an incentive for management to focus on strategically relevant sustainability issues.
The transition of companies’ business models to sustainable forms of production requires transparency on opportunities and risks resulting from the integration of social and environmental topics, SWIPRA said, adding that this would reinforce trust in corporate governance.
The research disclosed that 69% of Swiss and 63% non-Swiss institutional shareholders continue to have a high or rather high confidence in Swiss boards, up from 55% and 53%, respectively, in 2018.
The survey was carried out in September-October 2021 with 76 Swiss companies listed on the SIX Swiss Exchange, which represent around 73% of the market capitalisation of the Swiss Performance Index.
Also, 73 institutional asset managers and asset owners – domestic and foreign – took part, making at least 30% of equity investments managed worldwide, according to IPE data.
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