Summary
Currently, there is (still) no legal obligation for foundations to prepare a sustainability report. Nevertheless, there are several advantages for foundations to voluntarily report of their own sustainability performance:
- to serve as a role model for funding projects and to increase the value of experience for the use of funds
- to increase efficiency in the foundation's investment activities in sustainability-related projects
- to create its own competence in dealing with ESG reporting
- as an increase factor of attractiveness for donor market and fundraising
- as a supplement to annual reporting and to create transparency vis-à-vis the foundation's supervisory authority
Introduction
Swiss foundations have a long-standing tradition of contributing to social and environmental causes, reflecting Switzerland’s commitment to philanthropy and sustainability.
In recent years, Environmental, Social, and Governance (ESG) factors have gained significant importance in the global business and, in particular, in the investment area.
This shift towards responsible and sustainable practices has a profound impact on Swiss foundations, as they too recognize the relevance of ESG in their missions and operations.
ESG: A Brief Overview
ESG stands for Environmental, Social, and Governance, and it represents a framework for evaluating an organization's impact beyond its financial performance. It encompasses a wide range of factors that help measure an entity's commitment to sustainability, ethical conduct, and social responsibility.
Environmental: This factor assesses a foundation's impact on the environment, including its carbon footprint, resource consumption, and efforts to mitigate climate change.
Social: The social dimension of ESG looks at how a foundation contributes to the well-being of society. It includes considerations such as diversity and inclusion, labor practices, and community engagement.
Governance: Governance is about how a foundation is managed, including its transparency, accountability, and ethical practices. It also involves assessing the effectiveness of its leadership and decision-making processes. Governance is the building block for any ESG initiatives and reporting.
The Relevance of ESG for Swiss Foundations
Alignment with Swiss Values: Swiss foundations have a strong tradition of upholding values such as responsibility, ethics, and sustainability. Integrating ESG principles into their operations is a natural extension of these values.
Enhanced Impact: Foundations exist to make a positive impact on society and the environment. Incorporating ESG into their strategies helps maximize this impact by ensuring that their activities are both socially and environmentally responsible.
Mitigating Risks: ESG factors can be instrumental in identifying and mitigating risks that could affect a foundation's reputation and long-term sustainability. By addressing these risks proactively, Swiss foundations can safeguard their missions as well as avoiding being accused of greenwashing.
Attracting Stakeholder Support: Donors, beneficiaries, and the public increasingly value organizations that demonstrate a commitment to ESG principles. Swiss foundations that prioritize ESG might be more likely to attract support and trust from stakeholders.
Regulatory and Reporting Requirements: Swiss foundations are subject to regulatory requirements, and ESG reporting is becoming a global norm. Staying ahead of these regulations not only ensures compliance but also demonstrates a commitment to best practices and leading the way.
Implementing ESG in Swiss Foundations
Strategic Integration: Swiss foundations should integrate ESG considerations into their mission statements, strategic plans, and investment policies. This involves defining clear ESG objectives and metrics to measure progress.
Responsible Investing: Foundations can align their investments with ESG principles by selecting funds and asset managers that prioritize ESG criteria. This not only supports their values but can also lead to financial benefits in the long run.
Engagement and Collaboration: Foundations can collaborate with other organizations, both nationally and internationally, to amplify their impact on ESG-related issues. Engaging with stakeholders and sharing best practices can foster positive change.
Transparency and Reporting: Swiss foundations should be transparent about their ESG efforts and progress. Selecting a recognized reporting standard such as the Global Reporting Initiative (GRI) is the basis for an objective and reliable reporting. Regular reporting on ESG performance helps building trust with stakeholders and showcases their commitment to responsible practices.
Conclusion
In a world where sustainability, ethics, and social responsibility are becoming paramount, Swiss foundations have a unique opportunity to lead by example. The incorporation of ESG principles into their operations also enhances their impact, mitigates risks, and attracts support from stakeholders. By embracing ESG principles, Swiss foundations can continue their legacy of contributing positively to society and the environment while remaining relevant in an evolving philanthropic landscape.
