Financing and investments are considered climate compatible when they are in line with the internationally agreed climate target of keeping global warming under 2 degrees. The parliament implemented this target explicitly in the purpose article of the completely revised CO2 Act. For the time being, this objective should be implemented through voluntary measures taken by the financial sector. The federal government periodically records the climate impact of voluntary efforts.
After 2017, the FOEN and the State Secretariat for International Finance (SIF) initiated a second, comprehensive test in 2020 to analyse the climate goal alignment of financial portfolios. This test is being carried out under the title PACTA 2020 (Paris Agreement Capital Transition Assessment). All Swiss banks, asset managers, pension funds and insurance companies could test their portfolios anonymously on a voluntary basis. The pension fund association ASIP, the Swiss Insurance Association SVV, the Bankers' Association SBA, the Fund and Asset Managers' Association SFAMA and the Conference for Investment Foundations KGAST support the climate compatibility tests.
A total of 179 financial institutions voluntarily participated this time – more than twice as many as in 2017. The results show a representative picture of the whole Swiss financial market: around 80 per cent of investments in global equity and corporate bonds, half of all properties held by institutional investors and three-quarters of Swiss residential buildings covered by mortgages were assessed. Moreover, a qualitative survey provides information about climate-relevant strategies, while a stress test highlights risks.
PACTA 2020 is being coordinated internationally. Switzerland and the Netherlands presented a suitable initiative at the UN Climate Action Summit 2019 in New York. The countries that sign up to the initiative will help their financial institutions to test investments for their climate compatibility in an internationally comparable way and align them with the Intergovernmental Panel on Climate Change's 1.5 °C target (see press release of 20 September 2019).