As it does every year, Ethos has updated its voting guidelines and corporate governance principles, which will apply during the 2026 proxy season. This is the 25th edition of a document on which Ethos bases all of its voting recommendations.
Annual report and financial statements, dividends, discharge, sustainability report, election of board members, remuneration of executive management, election of the auditor. Each year, shareholders of listed companies, whether in Switzerland or abroad, must approve a number of items proposed by the board of directors and put to the vote at the annual general meeting.
In this context, Ethos issues voting recommendations for its members and clients, and anyone else who wishes to follow them, on all items on the agenda of companies listed in Switzerland (SPI) and for nearly 600 companies listed abroad. These recommendations are based on voting guidelines and good governance principles that are updated annually to take into account changes in legislation and best practices.
Clarification of expectations for sustainability reporting
For the 25th edition of its voting guidelines and corporate governance principles, the Ethos Foundation confirms and maintains its principles and expectations. The main change this year concerns the approval of sustainability or climate reports. Ethos clarifies its expectations by grouping its reasons for rejection into two distinct categories: lack of transparency and insufficient quality of published data on the one hand, and lack of ambition and performance deemed insufficient on the other.
After two years of applying the new law giving shareholders the authority to approve the sustainability reports of Swiss listed companies, Ethos wanted to clarify its reasons for rejection. ‘While our opposition is often linked to a lack of transparency, we have also found that more transparent companies lack ambition or backtrack on their non-financial objectives,’ says Vincent Kaufmann, CEO of the Ethos Foundation. However, we believe it is essential that these sustainability reports are not limited to a compliance exercise, but also, and above all, enable shareholders to assess the performance of companies. If this performance deteriorates due to a lack of ambition, shareholders must be able to express their disagreement.”
With regard to transparency, Ethos considers that a sustainability report must cover all material ESG issues, that relevant quantitative indicators must be published for each of these issues over a period of at least two years, and that they must be verified by an independent third party. The company must also publish the level of achievement of its objectives.
With regard to ambition, Ethos considers that the climate strategy must be aligned with the objectives of the Paris Agreement, that the company must take appropriate measures to reduce its CO2 emissions and not renounce past commitments without adequate justification. Ethos will also oppose the sustainability report if the company consistently fails to meet its targets or if a key indicator deteriorates over several years.
Criteria for the sustainability report auditor
Another change this year is that the voting guidelines have been updated to take into account regulatory changes and the election – or re-election – of the auditing firm for the sustainability report. In Europe, the CSRD directive requires limited external assurance of these reports, and in some countries that have already transposed the directive into their legislation, the appointment of this auditor must be approved by the general meeting. As with the auditing firm, Ethos considers it imperative to require independence criteria for these auditors and to limit their term of office to a maximum of 20 years.
