Swiss asset managers will report companies making them liable for sustainability practice.
Representing the asset management industry of Switzerland, the Asset Management Association Switzerland (AMAS) recently called upon Swiss asset managers in a letter of engagement to make their companies responsible for sustainability practice. For this reason, they need to stick strictly to standards of corporate governance and international sustainability if they want to combat climate change.
This letter constitutes active engagement which asset managers ought to be willing to undertake so as to contribute towards the commitment of those firms and companies in which they are investing towards ESG principles. The letter further calls banks, investment companies, and asset managers mainly who are members of AMAS to volunteer themselves as part of Swiss organizations, and to join forces and contribute with their efforts towards efforts and contributions of Swiss organizations regarding better sustainability.
Asset managers have roles in sustainability.
AMAS appeals to asset managers to use their power-by voting rights, not to mention-to force the companies to sustainability practices. According to the association, for achieving the worldwide climate goals of the UN 2030 Agenda for Sustainable Development and its broader objective of achieving net-zero emission by 2050, sustainable investments are necessary.
Asset managers in an AMAS engagement letter are held responsible to have the companies respect international standards of sustainability, robust corporate governance, and science-based emission reduction. Such a letter cannot serve as a legally binding action but expects much from the financial sector in Switzerland to promote and carry out responsible investment behavior.
The Swiss Stewardship Code
In so doing, AMAS presents the Swiss Stewardship Code in partnership with Swiss Sustainable Finance, best practices which should inspire the investor and asset managers to responsibly engage with a firm in which they have their investments. Towards this end, it is in the hope of promoting practices that are friendly towards sustainability and the creation of value over time by engaging in the exercise of active participation in the matters ESG through voting decisions that tend to environmental and social responsibility.
This is anticipated to help transition into a climate-neutral economy which is vital to address the challenges presented by climate change. Appropriate stewardship by asset managers is therefore anticipated to drive a company into embracing sustainable business practices ultimately leading to a net-zero economy, AMAS confirms.
Core Commitments by Swiss Companies
It calls for a commitment from Swiss companies to implement a set of basic principles on sustainability:
Corporate Governance: Organisations must implement the robust system of governance embracing the sustainability concept in their daily operations and business and decision-making process.
Main Practices of Sustainability All Organizations in Switzerland shall embrace the global best practices in sustainability especially towards a low carbon economy.
Emission Reduction Target: Companies should embrace house gas emissions reporting. Furthermore, companies should have science-based targets in reducing the emission.
Climate-Related Financial Reporting Businesses are encouraged to report their climate-related financial risks and performance in line with international reporting standards, including the Taskforce on Climate-related Financial Disclosures (TCFD).
These expectations constitute one aspect of the goal to be fulfilled by AMAS in hastening the transition to a low-carbon economy and making the Swiss financial industry set the pace in all aspects related to climate change mitigation within Switzerland.
Swiss top financial institutions support
The biggest part of giant Swiss finance banks signed to the letter of agreement in regards to responsible investment. Baloise, Lombard Odier, Pictet, UBS, and Zürcher Kantonalbank signed letters agreeing according to which AMAS adheres to the principle of sustainability being included in and promoted among collective best efforts within the boundaries of the entire Swiss financial system in accordance with its effectiveness and importance to provide proper encouragement towards responsible investment along with international goals of global sustainable objectives. These endorsements indicate that Swiss financial companies are in broad consensus that, apart from this moral imperative, sustainable practice forms a necessary part of long-term financial success. By being ahead of ESG consideration, these firms are consequently making it possible to define the future in which sustainability forms the center of decision-making within the economy.
Conclusion: It asks AMAS to advocate for such steps by the Swiss financial sector to further contributions to global efforts for sustainability, through encouragement of businesses to be guided under solid corporate governance, adoption of science-based reduction targets, and ensuring best practice in all its sustainability endeavours that lead to investment decisions being in line with the world’s goal to achieve a net-zero carbon footprint 2050. More financial institutions endorse the engagement letter and respect the principles of the Swiss Stewardship Code, bringing Switzerland’s asset management industry at the forefront of sustainable investment practice while being an example to others.
Source: AMAS