ESG - A Storm is Brewing

A storm is brewing across Europe, and Switzerland will soon be caught in it, latest by 2024 when Swiss #esg regulations take effect for larger companies. The storm is not a physical one like the many that are battering the coastal cities of neighboring countries. No. This one represents a sea change in society. The name of the storm is captured in just three letters – E.S.G., and stands for Environmental, Social, Governance that form a comprehensive lens on how we – you – do business. ESG is not another “woke” trend brewed by bureaucrats in Brussels. On the contrary, it represents a “tipping” point of societal change that will significantly affect how we manufacture, source and consume products, how much we pay for access to financing, and whether our consumers and customers wish to buy from us or not.

?Does any of this affect Switzerland? Currently, only the largest companies focus on it, but it is coming. As far as ESG is concerned, Switzerland is in the “eye of the storm” – calm winds, clear skies. Yet just a glance at our European neighbors gives a view of our future. There, ESG affects even the smallest companies. Switzerland imports 66% of its products from the EU, and 43% of Swiss exports are to EU countries – a level of integration that will have sweeping effects, and we will be forced to comply to their rules if we want continued access.

Case Study: Kunz AG – ESG-rated

Consider Kunz AG, a fictitious manufacturer of specialized machine parts, located in Thurgau. They have customers internationally and also a large base in Switzerland. Recently they invested in an ESG certification that is recognized worldwide, costing them only CHF180/year. With this certificate prominently displayed in all their corporate communications, they are seen as a company that cares about where it sources its products, cares about its employees and reflects world-class corporate governance. They have access to privileged financing because their bank knows that ESG correlates strongly with superior credit-worthiness. The many tenders they participate in all require answers to ESG-related topics. These are no longer necessary, due to their excellent ESG score. And they benefit from good publicity, also locally, because of their social commitment. Attracting excellent future workers is easier than for many of their competitors that do not have an ESG rating. In addition, the ESG platform - #Synesgy - they use enables them to oversee and manage the ESG performance of their entire supply chain.

What prevents you from acquiring an ESG certification? Yes, you will have to answer about 60 questions on governance, how you source and how you consume energy. Yes, it takes time and some soul-searching. But in return you will have given yourself a competitive edge, you will have put yourself on the right side of history and weather-proofed yourself against an impending storm...?