Swiss sustainable pension fund group Ethos Foundation has partnered up with SIX Swiss Exchange to launch the Swiss Corporate Governance Index.
The index is the first in Switzerland to select stocks based on best practice for corporate governance within the Swiss stock market.
The Ethos Foundation was created in 1997 by Swiss pension funds looking to promote sustainable investment and currently comprises 216 pension funds.
Its new product will select stocks from the Swiss Performance Index SPI by considering the capital structure and the negative impact of multiple classes of shares or an opting out/up clause.
This latest initiative aims at raising awareness of corporate governance risks by underweighting those with low scores and substantial CO2 emissions.
Likewise, companies that are subject to serious controversy will not be overweighted.
The strategy will assess the negative impact of a low level of board independence or when there is the permanent combination of the chairman/CEO function.
Remuneration is another focal point according to Ethos Foundation, as it will assess the negative impact created when the variable component of executive management remuneration is very large or when the board receives options.
Commenting on the index launch, director of the Ethos Foundation Vincent Kaufmann said: ‘The index simplifies the calculation and replication of our indexed corporate governance fund. At the same time, the index offers an alternative approach for investors.’