Regulatory work on sustainability in the financial market

The Federal Council launched the «Swiss Climate Scores» at its meeting on June 29, 2022. It recommends for all Swiss financial market players to apply this set of indicators to all investment products and client portfolios, where appropriate. In order to ensure that the «Swiss Climate Scores» continue to represent «best practice» in terms of climate transparency, they will be regularly reviewed in terms of comparability and incentives and adjusted if necessary, for the first time during 2023.

Swiss Climate Scores

Swiss Climate Scores: Best practice transparency on the Paris alignment of investments

The six indicators show how climate-friendly the companies held in the portfolio operate today and what they plan to do in the future. A study commissioned by FOEN examined how the forward-looking indicator on «global warming potential» should be structured and compared different methodologies. It concludes that the indicator provides valuable information, but should be supplemented by other indicators.

When choosing methods, the intended use case is central: «Implied Temperature Rise ITR methods» can be particularly useful for reporting because they include all sectors and long-term corporate climate pledges. Methods such as the PACTA climate tests can be particularly suitable for dialogue with companies («engagement») and sector-specific climate targets because they focus on companies' actual production plans. Different methods are currently being further developed, so the indicator on «global warming potential» is still optional.

Portfolio Climate Alignment (PDF, 1 MB, 22.06.2022)Study commissioned by FOEN (in English)

Parliament has instructed the Federal Council to draw up a report outlining measures to ensure that Switzerland's financial flows are climate-friendly. The Federal Council approved this report at its meeting on 17 November 2021. Measures that explicitly address the climate-friendly aspect of investments, such as industry agreements between the financial sector and the federal government, have a particularly positive impact on the climate. Furthermore, more transparency about investments and whether they are detrimental or positive for the environment can have a positive impact on the climate indirectly, as it allows people to make better-informed investment decisions (see Media release of 17.11.2021 on the Postulate report in German). At the same meeting, the Federal Council decided to pursue transparency measures to prevent greenwashing and to seek to conclude industry agreements with financial market players (cf. Media release of 17.11.2021 on greenwashing).

In its report on sustainability in the financial sector (June 2020), the Federal Council already set itself the target of making the Swiss financial centre a leading location for sustainable financial services. The aim is not only to strengthen competitiveness, but also to make an effective contribution to meeting climate and environmental targets (see press release of 26 June 2020).

From July 2021, the Swiss Financial Market Supervisory Authority (FINMA) requires large banks and insurance companies to systematically publish climate-related financial risks. The Council of States has also presented three postulates to Parliament with a view to determining further measures (see 'Law' tab on the bottom of the page ‘Climate and financial markets’). For its part, the FOEN is conducting research the potential to expand a regular PACTA progress analysis to other environmental areas, such as biodiversity. It is also conducting research into the actual impact of the climate and environment strategies pursued by financial market actors in the real economy (see also Climate impact and risks).

Because many Swiss financial market actors also sell financial products in the European Union, they are also affected by EU regulations. The European Commission has extended its strategy on sustainable finance and in 2021 introduced a range of regulatory changes, such as the requirement to disclose sustainability risks and impacts for all financial products and to explicitly consider non-financial objectives in advice given to clients. Furthermore, it already has a classification system (taxonomy) for 'green' economic activities in the field of climate change.

Last modification 01.07.2022

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