Struktur der Zusammenarbeit

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DSWs 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 [phone] -
www.ethosfund.ch
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Summary

• Ethos an Active Swiss Institutional Investor
• 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 of75 institutional investors.
• Objective Promote socially responsible
  investments (SRI) Role of think-tank
• Ethos Services SA
• Ethos Services is fully owned by the Ethos
  Foundation.
• Objective Offer various SRI services

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Ethos Services

• Advisor of Ethos investment funds
• Ethos Institutional investment fund (CHF 1100
  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

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Ethos members and clients

• Ethos 75 Swiss Pension Funds members with part
  of their assets invested in Ethos funds
• 400000 beneficiaries(with families 1 Million
  people out of 8 Million Swiss residents)
• Ethos 700 Million Euros invested in Swiss
  Equities
• 0.1 of the Swiss Market Capitalisation
• Ethos Main Swiss Proxy recommendations adviser
• Between 1 and 2 of the Swiss Market
  Capitalisation aresystematically following
  Ethos voting recommendations

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Ethos Main Types of Action

• 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 ?

• Long term institutional investors
• Are often captive investors whose only
  possibility is to engage in dialogue with the
  companies
• The main objectives of engagement
• Increase the value of the company for all its
  stakeholders in a sustainable way and to reduce
  the risks of dysfunction
• Raise companies awareness of the requirements of
  sustainable development and corporate governance
  best practice and encourage improvement

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Ways to approach the companies

• Basic financial and extra financial analysis
• Ethos Not necessarily through direct contact,
  but using the available financial and extra
  financial databases
• Engage in a dialogue with the management
• Ethos Direct contact (alone or together with
  other investors) is essential

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Different Types of Engagement

• 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
• Individual or collective engagement
• Individual shareholder
• Collective forming a group with other
  shareholders
• Targeted or transversal engagement
• Targeted at one company
• Transversal applicable to a group of companies

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Ethos Engagement-Pool (EEP)

• Objective To engage in dialogue with companies
  on the following topics
• Good corporate governance
• Environmental and social responsibility
• Choice of themes Defined by the Pool members
• Universe Swiss listed companies
• Implementation and communication Ethos Services
• Financing Each Pool members contribution is
  proportional to its amount of Swiss equities
  under management

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EEP Dialogue Topics 2005-2006

• 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
• Sustainable development
• Environmental and social reporting
• Adoption and implementation of company principles
  and codes of conduct

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Individual election of board members
Universe 100 largest companies listed in
Switzerland
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Threshold to submit a shareholder resolution at
AGM
Universe 100 largest companies listed in
Switzerland
25 companies proposed to amend theirArticles of
Association to reduce the threshold!
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Minutes of the AGM on the Web
Universe 100 largest companies listed in
Switzerland
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Environmental and social reporting
26 Companies of SMI Index
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Ethos participation in International Investor
Groups

• Enhance company awareness on climate
  change(Carbon Disclosure Project)
• Investor rally on climate change(Institutional
  Investor Group for Climate Change)
• Monitor internet companies activities in
  countries repressing freedom of speech (Reporters
  without border)
• Improve assess to medicine in third world
  countries(Pharma Shareowner Group)
• Fight against corruption in the extractive
  industry(Extractive Industry Transparency
  Initiative)