Swiss pension funds face stewardship misalignment challenge

Switzerland, one of the largest pensions markets in Europe prides itself on a strong focus on sustainability. But stewardship misalignment poses an ongoing challenge as new research reveals 

Major asset managers distributing to the Swiss market are often not following the same stewardship priorities as their pension funds investors, with US managers coming out as most misaligned, a new study has revealed.

The research, conducted by Investor Impact Initiative in collaboration with the Ethos Foundation and shared with Net Zero Investor ranks the 13 largest asset managers in the Swiss market according to their alignment with Ethos' voting recommendations for the 2023 AGM season based on 700 sustainability-related decisions at AGM’s across the globe.

Asset managers whose proxy voting pattern overlaps with Ethos are scored the highest while managers whose voting pattern does not overlap with Ethos recommendations are scored the lowest.

The research shows that Swiss managers are scoring relatively highly, with the first six spots in the ranking being taken over by domestic names. Meanwhile, US managers are scoring the lowest, with State Street, Vanguard, JP Morgan and BlackRock populating the bottom of the league table.

"The Ethos recommendations represent the most widely accepted definition of what it means to exercise voting rights in favour of sustainable development in Switzerland today", explains Eleanor Willi, founder of the Investor Impact Initiative.

A similar trend has been observed in the UK, according to research commissioned at the end of last year by the UK Asset Owner Roundtable, which highlights persistent misalignment between managers and owners.

Responding to these findings Ethos said that narrowing this gap was now a priority for both the Investor Impact Initiative and the Ethos Foundation.

Ethos said that it encourages its 251 pension fund members managing some CHF350bn (£307bn) to raise this issue with their managers.