Swiss Companies Make Progress on Sustainability Leadership, But Still Have Work to Do

The value of sustainability is undeniable. Around the world, we’re seeing companies outperform their competition by focusing on creating long-term, far-reaching benefits for investors, employees, customers, and the wider community.

It’s no surprise, then, that our Executive Committee Study, which analyzes publicly available data on Switzerland’s listed companies, found the 20 businesses on the Swiss Market Index (SMI) took big strides toward sustainable leadership in 2022.

SMI companies are leading the way in sustainability

Switzerland’s largest listed companies have now all tied a portion of their executives’ compensation to environmental, social, and governance (ESG) goals, up from 65% in 2021. Most impressively, 75% have created and openly published clear KPIs to effectively link remuneration to sustainability. This will ensure SMI companies have targeted strategies for advancing ESG activities, and executives will have the motivation to deliver.

Our Executive Committee Study also analyzed who is responsible for sustainability and found promising signs of it being a top priority in Swiss C-suites.

We were able to gather data on 17 of the 20 SMI companies and found six were managing sustainability through a central function. In five of these cases, there was an executive committee member with “sustainability” in their job title, while the sixth had made sustainability a part of the Chief Risk Officer’s role.

These companies are most likely to drive sustainability actions. With a chief sustainability officer—even one with wider responsibilities—there’s someone dedicating time and effort to sustainability and giving it a voice at the executive level.

At another seven companies, the CEO was responsible for sustainability. This gives sustainability the chance to become part of all major initiatives and discussions. But if the CEO simply hosts a roundtable of sustainability experts a few times a year, then it becomes a checkbox task.

The remaining four companies are in a tricky position when it comes to delivering on sustainability ambitions. They’ve given sustainability to a CFO, divisional leader, or regional head, creating a significant risk of it being just one of many topics on a long to-do list. And any actions these leaders do manage to take are unlikely to join up with the entire organization, minimizing their impact.

SMIM companies have work to do to catch up

The story of Switzerland’s second tier of listed companies, those in the Swiss Market Index Mid (SMIM), shows there’s still significant room for improvement. Only 60% of SMIM companies have linked sustainability to compensation, and half of those haven’t published clear KPIs.

When it comes to sustainability responsibility, only two companies manage sustainability through a central, executive-level function—and only one SMIM executive has sustainability in their title. However, in 44% of the 16 SMIM companies we were able to analyze, the CEOs are responsible for sustainability, so there is still potential for many companies to deliver meaningful actions.

Interestingly, 37% of SMIM companies have made sustainability a part of the CFO’s responsibilities. While this runs the risk of deprioritizing sustainability, it could also hint at an understanding of the financial value of sustainable leadership.

Corporate sustainability is on the right path in Switzerland

The year-on-year increase in the prominence of sustainability within Swiss executive teams is a promising sign for the future. As all stakeholders continue to demand meaningful action on ESG issues, sustainable leadership at the very top of companies will unlock transformational value.

Yet Switzerland’s largest listed companies aren’t in a position where they can rest. There’s still room for improvement, particularly within the SMIM.

A chief sustainability officer would be a good place for many to start as they would give sustainability a strong voice in the C-suite. Over time, they could make the topic part of the DNA of the company and encourage each function to integrate sustainability into its operations.