Switzerland’s top firms come under scrutiny

The Swiss Stock Exchange introduced a code of conduct in July 2002 Keystone

More than a third of Switzerland’s top 100 firms have failed to meet corporate governance guidelines set by the Swiss Stock Exchange (SWX), a new survey has found.

The Geneva-based funds manager, Ethos, on Tuesday launched the first of what it hopes will be an annual “ethics and transparency” ranking of Switzerland’s leading companies.

Banks and insurance firms topped the Ethos chart. They included UBS, Credit Suisse and Zurich Financial Services (ZFS), joined at the top by the food group Nestlé.

But those with poor levels of transparency included high-profile companies such as the chemicals group, EMS Chemie – headed by prominent Swiss politician Christoph Blocher.

Kaspar Müller, the Ethos vice-president, told swissinfo that the ranking was an important tool for shareholders seeking information about corporate governance.

“Swiss companies have progressed quite well in recent years. However, we’ve found there is still room for improvement,” Müller said.

Key areas of concern include the structure and make-up of many corporate boards.

At least 17 of the country’s top companies still have individuals acting as both board chairman and CEO.

Ethos said it was also concerned about cross-membership of boards, an issue that has been widely debated within Switzerland in recent years.

Fighting for access

Ethos said shareholders are often prevented from obtaining detailed information about board members, such as their attendance rates and lists of cross-memberships.

“For those sitting on many different boards, often these people don’t have enough time,” said Ethos director Dominique Biedermann.

“That’s all right if things are going well, but not when there is pressure. For example, have all the board members of [the national airline] Swiss got enough time? I’m not so sure,” he said.

The Ethos rankings are based on corporate governance guidelines recently issued by the SWX.

They cover issues such as the capital structure of a firm – whether enough of its shares are tradable and whether shareholders enjoy equal voting rights.

Ethos said it had adapted the SWX guidelines to establish a ranking system.

Some 71 of the 100 companies surveyed were judged as having “satisfactory transparency”.

The remaining firms – which included six SMI titles – had failed to conform with SWX standards, Ethos said.

Name and shame

In an effort to “name and shame” transgressors, Ethos has also categorised each of the surveyed firms into four groups.

Ethos said the “laggards” – firms with low transparency and poor corporate governance – were headed by Zehnder, Conzzeta, Belimo, EMS Chemie and Edipresse.

Next were the “window dressers”, companies that complied with the SWX’s requirements on transparency but had failed to address corporate governance issues. The top five were Schindler, Jelmoli, Basler KB, Dätwyler and Lindt & Sprüngli.

Firms with good corporate governance structures but poor transparency were branded as “secret implementers”. Converium, Straumann, Leica Geosystem and Givaudan were in this group.

And finally, Ethos listed the top five companies it considered to be “leaders”: UBS, Swiss Re, Credit Suisse, ZFS and Unaxis.

swissinfo, Jacob Greber in Zurich

In brief

Ethos is a Geneva-based funds manager with an interest in socially and ecologically responsible investments.

It has ranked Switzerland’s top 100 firms according to transparency and corporate governance standards.

Leaders include UBS, Credit Suisse, Zurich Financial Services and Nestlé.

“Laggards” include Roche, Swatch, EMS and Edipresse.

Ethos intends to make its rankings an annual event.