swissVR Monitor: Swiss companies struggling with sustainability

“The survey results send out a clear message: Sustainability has arrived on the strategic committees of companies, and board members are well equipped to set the course for a sustainable future. The scale and complexity of the ESG regulations are a major challenge for companies, and their implementation internally must also be a matter for the board of directors – not least because further regulatory steps have already been announced,” says Mirjam Gruber-Durrer, a lecturer at the Institute of Financial Services Zug (IFZ), part of the Lucerne School of Business.

Difficulties with measurement

The survey also shows that a clear majority (60 per cent) had experienced significant hurdles with regard to measuring their company’s environmental impact. Time-limited resources (51 per cent) and the high cost of sustainability measures (38 per cent) were named as further obstacles to the sustainability efforts (see Figure 2).

External pressure

The survey also reveals that the most frequent sustainability issues affecting companies at present are coming from outside and not from within the companies themselves. Fifty-nine per cent of companies cited regulation and 56 per cent changing customer needs in this respect. A somewhat surprising finding was the relatively low significance accorded to shareholders, with only 18 per cent of the board members surveyed naming investors as important drivers of their company’s sustainability. At large companies, however, this figure was just over a third (34 per cent).

Despite the generally high relevance of the topic and the significance they attach to the needs of their customers, fewer than half of the companies surveyed (49 per cent) were developing more sustainable products or services of their own. This is surprising, as there are hardly any sectors in which the development of sustainable solutions is not possible or useful for customers or which are not affected by the new ESG reporting and disclosure obligations.

Blind spot in the supply chains?

The most frequently implemented measure at the companies surveyed was not product development but efficiency enhancements in the use of energy (69 per cent). This is likely in large part to be a direct reaction to the much-feared electricity shortages last winter and is a step that also makes sense for cost reasons.

Furthermore, fewer than a third (30 per cent) of those surveyed stated that their companies had implemented measures to ensure compliance with sustainability criteria at suppliers and business partners. Similarly, only 26 per cent of board members said that their company was affected by sustainability risks along the supply chain. Against the backdrop of the due diligence obligations that apply to many companies in the supply chain (see box), these results appear very low, raising the question of whether there is sufficient awareness of the issue of risks in the supply chain. However, particularly exposed companies are more prudent in this regard – supply chain risks were cited as important sustainability issues by more than half of companies in the manufacturing and chemicals (55 per cent) and the commerce and consumer goods (53 per cent) industries.

Lack of sustainability objectives

A further challenge when it comes to implementing sustainability measures at Swiss companies is demonstrated by the fact that only just over half of the boards of directors surveyed (52 per cent) had defined sustainability goals for their company and were measuring the achievement of these objectives. According to their survey responses, fewer than a quarter (23 per cent) had fully completed these tasks and taken all the necessary steps for measuring the degree of target achievement. At large companies, this figure was 37 per cent.

Many boards also appear to be inadequately informed, with only half (50 per cent) receiving regular sustainability reports on their companies. At the larger firms, however, the proportion was 79 per cent (see Figure 3).

“The result of the swissVR Monitor clearly show that the boards of directors surveyed must take control and ensure better implementation of the sustainability strategies defined for their companies. One effective approach to this problem could be transferring specific sustainability issues to specialist committees in order to enable more in-depth examination of the issue, prioritisation of the measures to be taken, concentration on the topics relevant to the company, as well as better reporting. This would not only increase transparency but would also strengthen responsibility and improve the effectiveness of sustainability efforts within the companies,” believes Cornelia Ritz Bossicard, President of swissVR.

Sense of proportion needed with regard to regulation

“The swissVR Monitor shows a clear discrepancy between the growing legal and societal demands and the practical implementation of sustainability strategies at Swiss companies. It is important that politicians do not now create additional pressure by imposing further disclosure obligations. Instead, they should encourage the implementation of sustainability strategies with targeted incentives,” says Reto Savoia, CEO of Deloitte Switzerland.

“Data collection and reporting play an important role in making progress measurable and transparent. However, the most important contribution towards more sustainable development is made by sensible investments as well as innovative products and services. Enhanced capacity for innovation not only benefits companies but also the Swiss economic centre, and it helps to preserve the natural foundations of our livelihoods and production capabilities,” says Savoia.