GLOBAL AFFAIRS

GLOBAL AFFAIRS

Switzerland: a leading hub for sustainable finance
Switzerland’s financial center is tackling the global challenge of climate change. This means solid action and commitment
1 Dec 2022

The Swiss financial center is working to position itself as a world-leading hub for sustainable finance, something that requires concrete measures that must be implemented quickly. The first milestones in this regard were achieved in 2022: the launch of the Swiss Climate Scores and new industry initiatives show how seriously Switzerland’s financial center takes the global challenge of climate change.

The Building Bridges conference, co-founded by the Swiss Bankers Association (SBA), was held for the third year in a row in fall 2022. It is intended both as a platform for knowledge sharing and to promote sustainable finance in Switzerland and worldwide. As the Swiss financial center’s most important industry association, the SBA sees sustainable finance as a strategic priority and supports its members at various levels as they endeavor to make a proactive contribution to sustainability. Collaborating on implementing concrete measures quickly is essential to building the Swiss financial center’s leading position in sustainable finance.

Top-quality advisory services from Swiss financial institutions

In parallel with its ongoing efforts to improve the frameworks for sustainable financial products, the financial center intends to press ahead with its own sustainable finance initiatives. At the end of June 2022, for example, the SBA defined two new sets of binding self-regulation on sustainable banking business for its members. Among other things, these will improve the quality of advisory services provided to clients. Banks’ advisors are required to tell clients about sustainability in consultations, record their preferences, and present them with sustainable solutions while explaining the risks and rewards. With a focus on the central aspects of investment and real estate financing, the self-regulation sets out minimum requirements and standards, making sustainability integral to all consultations without forcing investors to make their entire portfolio sustainable. That is ultimately the client’s choice, not the bank’s.

Swiss Climate Scores create transparency on Paris alignment of financial investments

In addition to top-quality advice at the point of sale, a complete range of suitable, genuinely sustainable products is needed. Working together with the financial sector, the Federal Council has created a reliable seal of quality for investments in the form of the new Swiss Climate Scores, comprising six indicators designed to provide meaningful, transparent, and easily understandable information on the alignment of financial investments with the Paris Agreement on climate change, and make it possible to compare investments with each other. This puts Switzerland at the forefront of a global movement, positioning it as the first choice for Swiss and foreign clients and investors seeking to invest sustainably.

The Swiss financial center continues to make progress on its net-zero commitments

Committing to net-zero: good progress in Switzerland

A study published recently by PwC on the status of voluntary commitments to achieving net-zero greenhouse gas emissions by 2050 proves that the Swiss financial center is making progress in this regard. Some 62% of the total assets of SBA members are committed to the aims of the Net-Zero Banking Alliance (NZBA). Meanwhile, 61% of the assets under management of Asset Management Association Switzerland (AMAS) members are pledged to the Net-Zero Asset Managers (NZAM) initiative. These net-zero alliances have become a key instrument for the financial industry’s contribution to achieving global climate goals. By joining one of them, financial institutions commit to setting specific interim and long-term climate neutrality targets and drawing up a plan on how to meet them. They are, of course, also required to report on their progress every year.

All sectors of the economy must play their part in decarbonization

On the right track, but still a lot of work to do

As you can see, the proportion of the Swiss financial center’s financing solutions, assets, and insurance premiums committed to net-zero is growing. This is good news, but it is clear that there is still a long way to go, and all sectors of the economy must play their part in decarbonization. However, the financial center can continue to support the transition effectively with appropriate financing, asset management and insurance solutions. 

* Jörg Gasser has been CEO of the Swiss Bankers Association since May 2019.
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