Ethos has published this Tuesday the summary reports of the Swiss and international Ethos Engagement Pools (EEP) for 2021. These reports present the dialogue activities carried out by Ethos with listed companies regarding issues related to the environment, social or governance. Detailed reports are however only available for members of each pools.
Ethos' shareholder dialogue programs continued to attract new members in 2021. The Ethos Engagement Pool (EEP) Switzerland, which focuses on the 150 largest listed companies in Switzerland, had 153 members at the end of 2021 (representing CHF 280 billion in assets under management), two more than a year earlier, while the EEP International had 77 members (CHF 220 billion), i.e. 15 more than at the end of 2020.
The topic of climate change was once again at the heart of Ethos’ engagement activities, whether with Swiss or foreign companies. Ethos continued to play a key role within “Climate Action 100+” by leading the dialogue with the two Swiss companies targeted by this international collaborative initiative (Holcim and Nestlé). Through discussions and negotiations, Ethos notably obtained from the two companies that they agree to submit their climate transition plan to the vote of their shareholders (“Say on Climate”).
An intensive dialogue was also conducted with Credit Suisse regarding its climate policy. While the bank agreed to tighten its restrictions on financing companies active in coal, it was less receptive regarding companies active in unconventional fossil fuels. Ultimately, Ethos, in collaboration with the UK-NGO ShareAction and eleven institutional investors, filed a shareholders' resolution at the 2022 general meeting to ask Credit Suisse to reduce its exposure to the financing of companies active in fossil energies.
The question of diversity within governing bodies was also central in 2021. Ethos has in particular endeavoured to inform the boards of directors of Swiss companies whose diversity remains insufficient of its new voting guidelines which consists of opposing, as from 2022, the re-election of the chairperson of the nomination committee of companies whose board includes less than 20% of women without satisfactory explanations.
Finally, a great effort has been made to raise the companies' awareness on digital responsibility. After having sent to the chairperson of the 48 largest companies listed in Switzerland an “Engagement Paper” setting out seven Ethos expectations in this area, a study was carried out in partnership with EthicsGrade to measure their level of compliance with these expectations. Published in January 2022, this first study showed that companies are still poorly prepared for the many challenges of digital responsibility. The dialogue will therefore continue to encourage companies to implement best practices and a second study will be conducted in 2022.
Social issues at the heart of international engagement activities
Regarding international engagement, social issues remained a priority in the context of the COVID-19 pandemic. Ethos and the EEP International have thus actively supported the “Workforce Disclosure Initiative” by engaging with more than 20 companies. The aim of this initiative is to obtain standardised data from listed companies concerning their relations with their own personnel as well as that of their suppliers. Such data allow investors to compare the practices of companies and urge them to improve.
Deforestation being a major cause of global warming and biodiversity loss, a new engagement campaign was launched in 2021 in this area to encourage different companies active in the beef and soybean value chain to adopt best practices to avoid deforestation. The initiative covers both producers, traders and retailers. A first conference call was organised with each of the seven companies targeted before the end of 2021, during which Ethos was able to explain its expectations.
Finally, Ethos continued its direct dialogue with the "GAFAM" regarding tax responsibility. Despite several exchanges with the companies, they have expressed little desire to improve their transparency and tax practices. Ethos and the members of the EEP have therefore joined a coalition of investors coordinated by the British consultant PIRC in order to file a shareholder resolution at Amazon's general meeting demanding more tax transparency. Following Amazon's attempt to have this request overturned, Ethos and the members of EEP International co-signed a letter sent to the SEC to defend the resolution. On 6 April, the latter announced that the shareholders' resolution was indeed valid and would be put to the vote at the general meeting on 26 May.