Ethos publishes an Engagement Paper addressed at listed companies which summarizes investor expectations regarding climate change risk management. Despite the urgency of the issue, currently less than half of the companies listed on SIX Swiss Exchange publish their greenhouse gas emissions.
A major impact on the value of investments
Ethos, as a long-term investor in companies listed on the Swiss stock exchange, is particularly sensitive to climate change risk management. Not only will the need to contain global warming block the use of the assets of fossil fuel producers such as oil companies, but climate change will also have direct impacts on the value of all investments.
The measures taken on the political level to halt the rise in temperatures and to implement the agreement signed by 195 countries at the 21st Conference of the Parties (COP 21) in December 2015 will result in increased pressure on companies. The most proactive companies will without doubt have a competitive advantage due to their risk management but also due to opportunities in offering products and services that are part of the solution and not the problem.
Ethos’ five expectations from companies
A majority of companies listed on the Swiss stock exchange do not disclose any information on their greenhouse gas emissions, their strategy or the targets set to reduce their carbon footprint. Only 43% publish part or all of their greenhouse gas emissions.
Climate change is among the engagement topics between Ethos and listed companies since several years. In this context, Ethos today publishes an engagement paper addressed to companies which summarises what investors expect from them. The following five expectations have been formulated:
(A) Integrate climate change into company strategy
(B) Measure the company’s carbon footprint
(C) Adopt GHG emissions reduction targets
(D) Audit the data independently
(E) Communicate on the adopted strategy
Ethos hopes that a greater number of companies will opt for self regulation by being transparent on their CO2e emissions and measures taken to reduce their carbon footprint. Ethos is supported in this process by the 130 members of the engagement programme which the Foundation leads with companies listed in Switzerland (Ethos Engagement Pool). This programme represents investors with assets under management of CHF 170 billion, of which around CHF 20 billion are invested in Swiss stocks. These institutional investors mandate Ethos to lead a dialogue with companies listed on the Swiss stock exchange on various environmental, social and corporate governance (ESG) topics.