Transcript Struktur der Zusammenarbeit

DSW’s Fifth International Conference
Wiesbaden - 6 December 2006
How do active investors approach the
Company ?
The Ethos Swiss Experience
Dr. Dominique Biedermann, Executive Director
Ethos, 2 Place Cornavin, PO Box, CH-1211 Geneva 1
Tel. +41 (0)22 716 15 55 - Fax +41 (0)22 716 15 56 - www.ethosfund.ch
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Summary
1. Ethos: an Active Swiss Institutional Investor
2. Engagement: The Ethos Experience
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1.
Ethos: An Active Swiss Institutional Investor
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Ethos
Ethos – Swiss Foundation for Sustainable Development
Created in 1997 by two pension funds, currently composed of
75 institutional investors.
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Objective : Promote socially responsible investments (SRI)
Role of «think-tank»
Ethos Services SA
Ethos Services is fully owned by the Ethos Foundation.
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Objective : Offer various SRI services
Ethos Services
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Advisor of Ethos’ investment funds
 Ethos – Institutional investment fund (CHF 1’100 Million)
 Pictet-Ethos (CH) Swiss Sustainable Equities (CHF 170 Million)
Asset management and SRI advisory mandates
(CHF 400 Million)
Shareholder meeting analyses’ services with administrative
assistance for voting execution
Engagement programme to raise company awareness of
sustainable development issues and good corporate governance
best practice
Ethos’ members and clients
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Ethos = 75 Swiss Pension Funds members with part of their assets
invested in Ethos’ funds
 400’000 beneficiaries
(with families = 1 Million people out of 8 Million Swiss residents)
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Ethos = 700 Million Euros invested in Swiss Equities
 0.1% of the Swiss Market Capitalisation
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Ethos = Main Swiss Proxy recommendations adviser
 Between 1% and 2% of the Swiss Market Capitalisation are
systematically following Ethos’ voting recommendations
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Ethos’ Main Types of Action
A. Swiss Companies
 Exercise shareholder rights at AGMs
- Systematically vote on all agenda items
- Occasionally participate at AGM and speak up
- Exceptionally submit shareholder resolutions
 Engage in dialogue with management
- Ethos Engagement-Pool
 Keep in contact with SWX or other authorities
 Inform the press if necessary
B. Non Swiss Companies
 Vote at AGMs according to ECGS’ recommendations
 Participate actively at international investor groups
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2.
Engagement : The Ethos Experience
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Why actively approach companies ?
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Long term institutional investors
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Are often “captive” investors whose only possibility is to
engage in dialogue with the companies
The main objectives of engagement
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Increase the value of the company for all its stakeholders in a
sustainable way and to reduce the risks of dysfunction
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Raise companies’ awareness of the requirements of sustainable
development and corporate governance best practice and
encourage improvement
Ways to approach the companies
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Basic financial and extra financial analysis
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Engage in a dialogue with the management
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Ethos: Not necessarily through direct contact, but using the
available financial and extra financial databases
Ethos: Direct contact (alone or together with other investors)
is essential
Different Types of Engagement
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Reactive or pro-active engagement
 Reactive in response to an event (financial scandal, job cuts,
environmental disaster…)
 Pro-active for selected important issues with a long-term
perspective
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Individual or collective engagement
 Individual shareholder
 Collective forming a group with other shareholders
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Targeted or transversal engagement
 Targeted at one company
 Transversal applicable to a group of companies
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Ethos Engagement-Pool (EEP)
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Objective : To engage in dialogue with companies on the following
topics:
 Good corporate governance
 Environmental and social responsibility
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Choice of themes : Defined by the Pool members
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Universe : Swiss listed companies
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Implementation and communication : Ethos Services
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Financing : Each Pool member’s contribution is proportional to its
amount of Swiss equities under management
EEP: Dialogue Topics 2005-2006
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Corporate governance
 Individual elections of Board members
 Capital required to submit shareholder resolutions at GMs
 Executive remuneration
 Composition of the Audit Committee
 Publication of the GM minutes on the Internet
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Sustainable development
 Environmental and social reporting
 Adoption and implementation of company principles and
codes of conduct
Individual election of board members
Universe: 100 largest companies listed in Switzerland
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31.12.2003
31.10.2006
Individual elections
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78
Uncertain election mode
54
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Grouped elections
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Threshold to submit a shareholder resolution at AGM
Universe: 100 largest companies listed in Switzerland
31.12.2003
31.10.2006
0 % - 0.1 %
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15
0.11 % - 0.5 %
21
27
0.51 % - 1 %
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1.01 % - 5 %
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5.01 % - 10 %
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25 companies proposed to amend their
Articles of Association to reduce the threshold!
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Minutes of the AGM on the Web
Universe: 100 largest companies listed in Switzerland
31.12.2005 31.10.2006
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Minutes with voting results
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27
Minutes without voting results
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14
Press release
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No information
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Environmental and social reporting
26 Companies of SMI Index
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2004
2006
Swiss Leaders
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Making Progress
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Beginners
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Ethos’ participation in International Investor Groups
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Enhance company awareness on climate change
(Carbon Disclosure Project)
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Investor rally on climate change
(Institutional Investor Group for Climate Change)
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Monitor internet companies’ activities in countries repressing
freedom of speech (Reporters without border)
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Improve assess to medicine in third world countries
(Pharma Shareowner Group)
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Fight against corruption in the extractive industry
(Extractive Industry Transparency Initiative)