Sustainable financial investments: Federal Council wants more transparency
The Swiss financial center should be a globally credible location for investors who want to make a comparable and measurable contribution to the environment and society. To this end, the Federal Council has just adopted various measures.
Finance Minister Ueli Maurer announced it at the UN Climate Change Conference in Glasgow: The Swiss financial center should take a leading role with regard to sustainability. For this reason, the Federal Council is now recommending that financial market players create transparency in all financial products and customer portfolios with the help of comparable and meaningful climate compatibility indicators. This could be done, for example, with implicit temperature indicators: Here, the production plans of the companies included in the portfolios are compared with a development that is necessary to limit the maximum warming to 1.5°degrees Celsius. According to the Federal Council's statement, such indicators provide investment clients with a simple way of understanding how financial products should be classified in terms of their impact on the climate. In addition, the Federal Council encourages the financial sector to join international "net zero alliances"; industry agreements to this effect should be sought. Net zero means that no more greenhouse gases may be emitted globally than can be absorbed by natural and technical reservoirs.
Promote uniform definitions
If customers of financial institutions are knowingly or unknowingly deceived or misled with regard to the sustainable characteristics of financial products and advisory processes, this is referred to as greenwashing, as the Federal Council further emphasizes. Therefore, it makes sense to promote uniform definitions of sustainability impacts. At the same time, the subsidiary role of the state should remain as far as possible. Since Switzerland has entered into commitments for the financial market in the climate sector with the Paris Agreement, an initial focus on climate impacts makes sense. This focus is in line with international developments, such as those of the G20 and the EU.
Adapt financial market law if necessary
The Federal Council has also instructed the Federal Department of Finance (FDF), in cooperation with the Federal Department of the Environment, Transport, Energy and Communications (DETEC), to present to it by the end of 2022 the extent to which the financial industry has implemented the above-mentioned recommendations and, if necessary, to submit proposals for measures. Finally, the FDF was instructed to work with the Uvek and the financial market supervisory authority Finma to propose by the end of 2022, if necessary, how financial market law could be adapted - particularly with regard to transparency - to avoid greenwashing.
Positive in principle, but ...
And what does Greenpeace Switzerland say about the Federal Council's measures? Larissa Marti, Greenpeace expert on climate and finance, says: "The Federal Council recognizes the importance of the Swiss financial center in the fight against the climate crisis and identifies possible measures to make the financial market more sustainable. It also recognizes that financial institutions need to work more concretely and in a very targeted way towards achieving the Paris climate change targets. It also identifies a need for action with regard to transparency and comparability of financial products. All of this is positive. But the Federal Council is failing to take the reins and quickly implement the measures identified as most effective and declare them binding. In doing so, it is sending the wrong signal. The urgency of the climate crisis requires immediate and effective action. The Swiss financial center has so far failed to prove that it is capable of voluntarily bringing its businesses onto a climate path at the required pace. Regulatory policies are needed."
Regular climate test for the Swiss financial market
An important basis of the report (see below) is the voluntary PACTA climate test for financial institutions. PACTA stands for "Paris Agreement Capital Transition Assessment," which is an internationally coordinated test model. Most recently, in 2020, the entire Swiss financial market underwent climate testing at the initiative of the Federal Office for the Environment and in cooperation with the State Secretariat for International Financial Matters. The climate test had shown that more concrete measures were needed from the financial sector to ensure that the financial center made its contribution to achieving climate targets. The next voluntary PACTA climate test will be launched in spring 2022.
See also Federal Council report "How can Switzerland align financial flows in a climate-friendly way?"
