Ethos and its partner EthicsGrade have examined how the largest listed companies in Switzerland manage issues related to digitalisation, be it data protection, the use of artificial intelligence or the environmental and social impact of their digital systems. While progress has been made compared to last year, transparency is still sorely lacking.
Issues related to the digitalisation of the economy have continued to dominate the media spotlight in recent months, whether in relation to the increasing number of cyber-attacks or artificial intelligence (AI), which, like ChatGPT, is becoming more and more a part of our lives. In parallel, regulations are evolving and strengthening, creating new obligations but also new risks for companies. The new Swiss law on data protection will come into force in September, while the European Union is fine-tuning its legal framework around AI.
It is in this context that the Ethos Foundation publishes its second study on the digital responsibility of the largest listed companies in Switzerland. As in 2021, Ethos and its partner EthicsGrade have examined how the 48 companies listed on the SMI Expanded manage their digital challenges in seven specific areas: governance, transparency, data protection, use of AI, management of sensitive activities and, finally, social and environmental impact. These areas refer to the seven principles identified by Ethos in terms of digital responsibility.
Increased participation and average results
The first observation is that the dialogue and awareness-raising work carried out by Ethos is beginning to bear fruit. The number of companies that answered the questionnaire has increased by 50% compared to 2021, from 12 to 18 out of 48. For the other 30, the evaluation is based solely on public information identified and analysed by the EthicsGrade teams.
The second finding is that the scores have improved considerably. Seven companies obtained more than 50 points (out of 100), whereas only three companies obtained more than 20 points last year. The average score rose from 10.5 to 22.8 points, with a maximum of 87 points for Swisscom, which leads the ranking this year. Only five companies scored worse than in 2021.
Other positive points include the fact that 33 companies - 25 more than last year - say that efforts are being made to reduce the environmental impact of their digital technologies, and 22 companies - 18 more than in 2021 - say that they are taking data protection into account at the design stage of a product or service ("privacy by design" approach).
Blatant lack of transparency
Unfortunately, the results of this new study are not all that encouraging. First, most companies did not respond to the questionnaire sent by Ethos, either due to lack of time or interest. Secondly, while the average score was 42.4 points for the 18 companies that responded to the questionnaire, it dropped to 11.1 points for the 30 others.
Furthermore, there are sometimes significant differences between the scores based on the companies' responses and those based on publicly available information (annual report, website, etc.). Using only publicly available information, the average would fall to 11.2 points (8.5 points in 2021) and only four companies would score above 20 points.
These differences show that there is still a great lack of transparency on the part of companies regarding digital responsibility. However, as the news of recent months has shown, digital responsibility is an issue that is gaining in importance and Swiss companies cannot afford to be lagging behind on these issues.
Investors obviously have an essential role to play in encouraging listed companies to improve. In this respect, the Ethos Foundation is one of the forerunners. Since 2020, it has vigorously engaged with Swiss companies to raise their awareness of these issues and provide them with avenues for improvement.
However, the results of this second study highlight the need to further intensify the dialogue. After three years of engagement, answering positively to questions in a questionnaire is no longer sufficient and it is time for companies to be transparent and publish relevant information on how they are addressing digital issues. The data collected by Ethos and EthicsGrade provide a solid basis to remind them that there is still a lot of progress to be made.
A third study is already planned for 2023.