Sustainable Finance

Our production patterns and consumer habits are overstretching the natural limits of the planet. The consequences are climate change, water shortages and loss of biodiversity. The financial sector, in its role as enabler, can facilitate the necessary transition of the real economy to a resource-efficient and sustainable economy in order to ensure that current and future generations have functioning ecosystems.

The state can support the industry's efforts as an intermediary. With regard to environmental sustainability in connection with financial market policy, the Federal Council sees both the opportunity to reduce the impact of environmental risks on financial stability and to exploit business opportunities for Switzerland's financial centre.

Double materiality

There is an indirect link between our environment (climate and biodiversity) and the financial sector, which arises through investing in companies that are dependent on biodiversity and ecosystems while simultaneously having a negative impact on them. This bilateral link is referred to as double materiality, which means double the risk. For the environment, there is a risk of degradation of ecosystems and the loss of biodiversity. The associated decline in ecosystem services in turn creates a risk for the companies that depend on these services (physical risk). Negative effects on the environment caused by companies can also lead to reputational and transition risks. Double materiality is the key focus of the federal government's current strategy on sustainable financing. For example, in order to ensure transparency in the financial market, companies should disclose not only climate risks, but also climate effects.

Need for political action

The economy and the state are aware of their responsibility with regard to global warming, environmental pollution and the effects of declining biodiversity. Switzerland and the international community agreed on 17 Sustainable Development Goals (SDGs) that are applicable globally under the 2030 Agenda. In 2019, the Federal Council also committed to the goal of a net-zero Switzerland (a balance between the amount of greenhouse gas emissions produced and the amount removed from the atmosphere). With the popular vote on the Climate and Innovation Act in June 2023, this goal has now been incorporated into law. Switzerland has also signed joint global targets for the conservation of biodiversity by 2030 and 2050 as part of the Convention on Biological Diversity (CBD COP-15).

The SDGs and the climate and biodiversity goals cannot be financed with public funds alone, which is why it is crucial to mobilise private funds too.

Switzerland and its financial centre will also have to identify measures to align financial flows in a biodiversity-friendly way. This is in line with the Federal Council's Sustainable Finance Strategy.

Federal Council decisions and measures

For 2022, the Federal Council has set itself the goal of consolidating Switzerland's position as a leading location for sustainable finance. In its report of December 2022, it defines the next steps and lays down the strategic foundation for the federal government's work in the area of sustainable finance for the years 2022 to 2025. It specifies four areas for action: sustainability data from all sectors of the economy, transparency in the financial sector, impact investments and green bonds, and pollution pricing.

The federal government's current work on sustainable finance focuses in particular on climate and biodiversity issues, as this is where commitments already exist or are being developed to align relevant financial flows. It is also where the basic principles such as data, measurability and approaches to pricing are the most advanced internationally.

Biodiversity and the financial markets

Biodiversity is in sharp decline worldwide with economic activities that harm biodiversity being the main cause. Financial institutes also have a negative impact on biodiversity when they finance biodiversity-damaging activities by companies.

As an estimated half of global economic output is moderately to heavily dependent on biodiversity, both the real economy and the financial sector are exposed to huge risks from biodiversity loss. In its Global Risks Report, the World Economic Forum (WEF) identifies biodiversity loss as one of the greatest risks to the economy as it is also connected to the loss of essential ecosystem services. Companies that rely on fertile soils, insect pollination or water supply, for example, are therefore directly exposed to the risks of biodiversity loss. Financial institutions that are invested in these companies are also indirectly exposed to these risks.

As part of the financial decisions under the CBD COP-15 biodiversity agreement, it was agreed that industrialised countries should collectively provide USD 30 billion annually by 2030 from public and private sources in order to support biodiversity conservation in developing countries. This requires Switzerland to give greater weight to the protection and sustainable use of biodiversity within the framework of its international cooperation.

The federal government is committed to improving the disclosure of biodiversity risks and impacts and welcomes the creation of internationally comparable, meaningful transparency on biodiversity risks and impacts in the financial market.

Task Force on Nature-related Financial Disclosures

The Taskforce on Nature-related Financial Disclosures (TNFD) is a global, market-driven initiative that has developed a set of recommendations for organisations to disclose their nature-related dependencies, impacts, risks and opportunities. It was published in September 2023.

Switzerland is committed to ensuring that the work of the TNFD forms the basis for the future biodiversity disclosure standards of the International Sustainability Standards Board (ISSB) in relation to biodiversity. The FOEN and the State Secretariat for International Finance (SIF) support the TNFD through their membership of the Stewardship Council.


The ENCORE tool helps financial institutions integrate biodiversity issues into their financial decisions. In this way, financial flows can be redirected from economic activities that harm biodiversity to those that are beneficial to it. The biodiversity conservation goals defined by the CBD serve as a guide.

A first version of the SECO-supported ENCORE tool identified biodiversity risks associated with economic activities. With the support of the FOEN, the biodiversity risks are now being supplemented in a second version of the tool with impacts on biodiversity. Various indicators show the extent to which an investment portfolio is damaging biodiversity and the extent to which it can potentially be aligned with international biodiversity targets. As a result, concrete steps can be taken to make the portfolio more biodiversity-friendly. The tool was developed in collaboration with major banks and insurance companies. It is freely accessible and intended to serve as a useful aid for Swiss and global financial institutions to align themselves more closely with global biodiversity goals.

Water and financial markets

Globally, 90% of all natural disasters are water-related. The water crisis and associated risks are expected to accelerate due to climate change, increased demand for freshwater, and income growth. The effects will be felt by civil society, private companies and investors alike. 

We are already seeing the emergence of significant stranded assets due to their exposure to various types of water risks. This report provides specific examples of such events that have recently occurred in four of the most water-dependent sectors: coal, oil and gas, energy, and metals and mining.

Water risks are closely intertwined with other environmental risks. If these risks are not dealt with appropriately, climate and biodiversity risks could accelerate. Dealing effectively with water risks therefore helps mitigate biodiversity risks and achieve the goals of the Paris Agreement and the Convention on Biological Diversity (CBD).

Although many investors acknowledge water-related risks, only a few of them consider the consequences of their investment and financing decisions on the availability of water – both in terms of quantity and quality – in the longer term, or maintain an active relationship with investee companies. Investors can play an active role in helping to solve the water crisis.

The following publication shows how investors, together with the companies in which they are invested, can contribute to the realisation of SDG 6 of the 2030 Agenda (Clean Water and Sanitation) by ensuring water security at water basin level.

Sustainability in financial education and training

In its report Sustainable Finance Switzerland – Fields of Action 2022-2025 for a Leading Sustainable Financial Centre, the Federal Council includes sustainability expertise in the financial markets among the measures to promote transparency in the financial sector. The availability of specialists and managers with sustainability expertise is an important prerequisite for creating transparency and successfully establishing a Swiss leadership role in the area of sustainable finance. Due to the highly dynamic nature of developments in the sustainability sector in particular, formal vocational training qualifications and internal or industry-specific training and further education programmes also play an important role.

The FOEN supports work aimed at identifying gaps and practical measures in sustainability in the financial education and training system in Switzerland.

Further information

Last modification 07.07.2022

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