Stockholm (NordSIP) – While European regulators have had considerable success in pushing through a number of reforms requiring increased transparency from companies and asset managers, issues still remain with the data underlying these disclosures.
To address this issue, the Swiss pension funds organised around the Ethos Foundation have now added the Ethos Climate Transition Rating to their roster of tools to review sustainable performance. This new tool is a methodology specifically created for assessing global warming caused by the activities of listed companies. It is presented as an answer to the absence of an internationally recognised uniform standard.
Launched in 1997, the Ethos Foundation was created by Swiss pension funds to promote “socially responsible investment (SRI) as well as a stable and prosperous socio-economic environment that safeguards the interests of civil society today and in the future.” As of July 2023, the organisation counts with 250 members, representing CHF355 billion and covering almost 2 million insured clients. It is a member of the Climate Disclosures Projects (CDP), the Institutional Investors Group on Climate Change (IIGCC) and the PRI, among other initiatives.
The Ethos Climate Transition Rating
For institutional investors, the Ethos Climate Transition Rating is a way of measuring the alignment of their portfolios with climate objectives and monitoring the exposure of their investments to climate risks. Ethos’s new methodology will also help investors with their engagement with companies on climate issues and assist them in the decision of whether or not to approve climate-related votes at a general meeting.
The Ethos’ platform is expected to soon allow its users to automatically generate reports that comply with the new ASIP and AMAS recommendations on ESG reporting and the “Swiss Climate Scores” developed by the Swiss State Secretariat for International Finance.
The new climate tool complements the reporting solutions already offered by Ethos, including the Ethos Swiss Corporate Governance Index and their proxy voting analyses and administrative support.
A Realistic Tool
The Ethos Climate Transition Rating seeks to provide a comprehensive, realistic, and credible picture of the climate impact of companies. “There is currently no internationally recognised standard for measuring the temperature of companies,” stresses Vincent Kaufmann, CEO of Ethos.
“Our research has shown that the results vary significantly depending on the data, methodology and assumptions chosen. Furthermore, most existing methodologies have one thing in common: they assume that the climate targets published by companies will be met. However, empirical data shows that this is not the case and that most climate targets have not been met to date,” Kaufmann concludes.
