Swiss foundation Ethos, which is composed of 218 Swiss pension funds and other tax-exempt institutions, has launched the first index focused on corporate governance at Swiss companies on the Swiss stock exchange.
Ethos has partnered with SIX Swiss Exchange for the launch of the Ethos Swiss Corporate Governance Index that takes into account the main corporate governance best practice criteria in order to define the weight of the different components.
The index aims to :
- Reduce the corporate governance risks by underweighting or excluding companies that do not apply best governance practices
- Reduce the carbon impact of the index by underweighting companies with significant carbon emissions
- Avoid overweighting companies that are under a serious controversy
- Avoid overweighting companies that have a weight exceeding 15% in SPI
- Overweight companies that do not fall into one of the above categories.
Among criteria taken into account for the index remain capital structure (negative impact when there are multiple classes of shares or an opting out/up clause), board (negative impact when the level of board independence is low or when there exists a permanent combination of the chairman/CEO function) and remuneration (negative impact when the variable component of executive management remuneration is very large or when the board receives options).
As of 30 January 2017, the fund “Ethos – Equities CH indexed Corporate Governance”, managed by Pictet Asset Management will fully replicate the index.
The associated voting rights are exercised in line with the Ethos voting guidelines. Ethos specified that the fund will be open to Swiss private investors very soon.
Ethos’ CEO Vincent Kaufmann said “the innovative methodology of this index allows mitigation of the risks of poor corporate governance that are ignored by the classic indices. This provides investors with a better protection from corporate governance risks.”
“The Ethos mandate to establish a corporate governance index confirms our index calculation capabilities and supports the positive development of our proprietary index suite,” commented Chris Landis, Division CEO SIX Swiss Exchange.
The Ethos foundation has been founded in 1997.