Study on ESG reporting in Switzerland 2020 better than their reputation
The largest listed Swiss companies are an important reference point and a role model for many small and medium-sized companies. Since the beginning of the new millennium, and even more since the Paris Agreement 2015, large Swiss companies have stepped up their sustainability initiatives. However, the growing commitment is repeatedly called into question in public discourse, especially when it comes to the multinationals. This study on the SMI Expanded Companies examines how sustainability reporting has been anchored and structured in the largest Swiss companies to date. It also provides initial indications of whether the topic will gain or lose importance in connection with the current crisis.
Supporters of the Swiss Responsible Business Initiative point out that voluntary sustainability standards are not sufficiently effective, as do climate activists. Recently, there has also been criticism of rating practices, and the accusation of greenwashing has spread to sustainability ratings. This criticism is countered by the trend among investors of attaching significantly more weight to so-called ESG criteria (environmental, social and corporate governance) in their investment decisions and linking them to hard criteria. Prominent examples are the Norwegian State Fund Norges Bank Investment Management or the US asset manager Blackrock. In 2015, the Swiss national institutional investors founded the Association for Responsible Investments (SVVK). Since then, several landmark decisions have been taken and implemented, reinforcing the trend towards tighter guidelines. Legislators are also exerting pressure. Revised EU guidelines on sustainability reporting are expected by 2020, and in Switzerland, too, climate goals and social issues will receive a boost with the new parliament.
Impact of the pandemic still unclear
The effects of the Covid-19-pandemic on ESG developments are only vaguely visible so far. There is a growing number of voices from important financial market experts that the ESG topics, especially the social dimension, will gain in importance with the Covid-19-crisis. This crisis reveals major differences between companies in their dealings with their employees and customers. Those who were not in a position to take rapid measures to protect people in the direct sphere of influence were quickly pilloried. In the second phase, the public debate is now going on about how companies should behave in the area of salaries and dividend payments, especially if they have to take advantage of government support. 2 | 6 However, many stakeholders doubt that companies will now focus on ESG issues. In the crisis, according to these critics, they envisage a return to an old order, in which company managers will once again base their decisions more strongly on key financial figures and the profit (or loss to be reduced) for shareholders, especially when survival is at stake. ESG engagement and reporting would therefore become less relevant as a result of the crisis. Is ESG moving in or out of focus in large companies? This study aims to describe the current situation in ESG reporting of the largest Swiss companies in order to provide answers to these questions.
Global Reporting Initiative as overarching standard
In order to be able to contribute to the discussion with a clear statement on the changes in the sustainability reporting of the largest Swiss companies over the last few years, this study examines the companies' reporting according to the Global Reporting Standards (GRI). The latest GRI guidelines have been in force since July 2018, so this is an ideal time for an interim review. The GRI standards are the most widely used sustainability standards in Switzerland and worldwide. Around 3,000 companies worldwide have already adapted them. In total, the GRIRegister lists 78 companies based in Switzerland that have already submitted at least one annual report in accordance with the latest GRI standards. Many companies also integrate into the GRI report how they implement the UN's Sustainable Development Goals (SDGs) within the guidelines of the UN Global Compact.
The study examines the sustainability reporting for the years 2018/2019. The data consists of the most recent reports of the 47 largest listed Swiss companies as of the end of March 2020 (based on the SMI Expanded Index). Most of these companies report according to the GRI standard. One company in the real estate sector reports according to the standard of EPRA, the Association of European Listed Real Estate Companies. The EPRA standards are also recognised by the Swiss stock exchange SIX as a sustainability reporting standard, but this report is excluded here in the further explanations. Furthermore, some companies report according to other, less widely used standards that are not officially recognised by SIX. These have not been further investigated.
The full study can be downloaded as a PDF below.