Board Committees Board Committees Board Committees

Board agendas are becoming vaster and topics are getting more complex. Although not required by law, mainly large and listed companies have set up committees with relevant expertise to support the board of directors (BoD) and help make decisions more efficiently.

The committees support the BoD in fulfilling its legal duties (according to Article 716a Swiss Code of Obligations) by assessing specific topics such as audit, compensation or sustainability in depth. The committees report to the BoD on their activities and findings. Overall responsibility for the duties delegated to the committees remains with the board.

Whereas a compensation committee is required by law for listed companies, audit committees, nomination committees, risk committees and also ESG committees are widespread. Competencies and responsibilities of the committees have to be stipulated in corresponding organizational regulations. Best practice is found in the Swiss Code of Best Practice on Corporate Governance, issued by economiesuisse.

For more information on the different committees access: 

• Audit committee
• Nomination committee
• Compensation committee
• ESG committee

The focus of an audit committee's work is the financial reporting, the internal control system, the internal and the external audit. It increasingly deals also with the non-financial reporting-process. For that, audit committee members should be independent and be experienced in these fields or even be financial experts.  

Only in the financial service industry is an audit committee required by law in Switzerland. However, the Swiss Code of Best Practice for Corporate Governance recommends setting up an audit committee. Many larger companies have already done so in recognition of the benefits of dedicated board-level resources for this important topic. 

We expect a focus on eight key topics:

• Stay focused on financial reporting and related internal control risks –job number one
• Clarify the role of the audit committee in overseeing the company’s ESG risks
• Maintain a sharp focus on leadership and talent in the finance organization
• Reinforce audit quality and set expectations for communications with the external auditor
• Make sure internal audit is focused on the company’s key risks – and is a valuable resource for the audit committee
• Help sharpen the company’s focus on ethics, compliance, and culture
• Stay apprised of global tax developments, and understand that tax has become an important element of ESG
• Take a fresh look at the audit committee’s composition and skill sets

Audit committees have to cover a wide range of issues. Time is limited, so asking the right questions is critical. Our audit committee questions series (prepared by KPMG’s Global Audit Committee Institute) is a great way to spark a conversation and consider your position.

Our experts are happy to support you personally in deepening these topics.

The audit committee works closely with external and internal audit teams to safeguard quality, ensure compliance and gain valuable business insights. 

Effectiveness of the external auditor: The evaluation of external audit effectiveness is subject to increased regulator and investor focus. Not only is it core to the audit committee role but it can have an impact on any recommendations around audit tendering and/or rotation.

External audit scope: In the current environment, audit committees, regulators and other stakeholders are sharpening their focus on audit quality. A thorough review of the audit plan is an essential starting point to ensure audit quality is at the level it should be.




Private sessions with the external auditor: Meeting the external auditor in a private session where management is not present allows the auditor to provide candid, often confidential, comments to the audit committee.

Effectiveness of the internal audit function: An effective internal audit function can have a positive impact on the control environment of an organization and the effective design and operation of internal control. The audit committee should regularly evaluate the effectiveness of the internal audit function to ensure that the benefits to the organization are optimized.

Internal audit scope: The role that internal audit can play within an organization can be significant and of high value to the audit committee. The scope does not need to be limited to providing the audit committee with assurance over the controls implemented by management and can head toward a "consultancy" role, providing strategic support to the audit committee and company. Establishing the "right" scope for the internal audit function is not a "one size fits all" exercise.

Private sessions with the head of internal audit: Meeting the head of internal audit in a private session allows the audit committee to ask questions beyond the scope of the internal audit plan. The head of internal audit can often deliver valuable views and opinions based on the work of the internal audit team.

The nomination committee is responsible for ensuring that the Board and top management have and will have the right combination of skills, backgrounds, experiences and top management have and will continue to have the right combination to navigate the company through an increasingly volatile and fast-paced global environment.

Today’s new reality presents a unique opportunity to reshape the board composition while working toward providing truly equal opportunities to reach a boardroom that is fit for the future. We explore what’s on the agenda for nomination committees in 2023:

• Skillsets to expand and enhance ESG oversight
• Quicken the pace on visible and invisible diversity
• Move the dial on diversity
• Board skills required to support growth
• Succession planning
• Planning for increasingly active investors

The compensation committee is responsible for policies on pay, compensation reports and related discussions with shareholders. Executive compensation is sure to be on the agenda of the shareholders' meeting – and has even been known to hit the headlines. This is especially true given the current economic outlook.

Compensation committees will need to balance economic uncertainty with the need to retain the key talent required to navigate the business through these challenging times. 

We have highlighted areas to keep in mind as compensation committees consider and carry out their 2023 agendas:

• Cost of living crisis
• "Windfall" gains on long term incentives plans
• Continued focus on the ESG agenda
• The Swiss Angle – Findings from the SWIPRA Governance Survey

ESG committees are becoming an increasingly common presence on boards of listed companies. Whether they’re referred to as the corporate responsibility committee, responsible business committee, sustainability committee or environments and communities committee, some listed companies now have some form of ESG committee.

How companies address climate change, diversity issues, and other ESG risks is now viewed – by investors, research and ratings firms, activists, employees, customers, and regulators – as fundamental to business and critical to long-term sustainability and value creation.  

In our ESG agenda 2023 we put the focus on:

• Clarity of purpose
• An ESG competent board
• Engage proactively with shareholders and other stakeholders
• Embed ESG, including climate risk and diversity issues, into risk and strategy discussions
• Driving the transition towards a more purposeful ESG oriented organisation through culture
• Systems, controls and data
• Reporting to investors and other stakeholders
• The Swiss Angle – Findings from the SWIPRA Governance Survey