On the demand side, private and institutional investors have their part to play. To make it easier for them to choose sustainable investments, rules and definitions need to become more standardised. Second, training and education is key to maintaining the dynamism of the financial sector. Lastly, financial flows reflect what is happening in the economy more broadly. The challenge, therefore, is to promote a shared commitment and dialogue across the financial sector, government and civil society.
Skills
Banks and financial institutions have developed considerable expertise in structuring financial products that deliver attractive returns and meet sustainability standards. But the transition to more sustainable forms of investing doesn’t depend solely on the financial sector.
Sustainable finance is everyone's business!
Private- and public-sector players are determined to facilitate a more sustainable and competitive Swiss financial centre by adopting a conducive regulatory framework.
- This was amply illustrated by several leading Swiss financial industry associations which published important documents with the aim of positioning Switzerland as a leading global centre for sustainable finance:
In late June 2022, Swissbanking published two self-regulations for financial services providers : the first on the integration of ESG preferences and risks in the investment advisory and portfolio management processes, and the second on the mortgage advisory process, with a view to improving the energy efficiency of buildings. These two self-regulations came into force on January 1. 2023.
At the end of September 2022, the Asset Management Association Switzerland (AMAS) published a self-regulation on transparency and disclosure by collective assets with reference to sustainability, with the aim of strengthening the role of the Swiss asset management industry in the field of sustainable finance. This self-regulation also defines the requirements not only for the organisation of financial institutions, but also for the design and information on products for investors. This directive, which is binding on AMAS members, came into force on September 30, 2023.
In order to comprehensively reflect the Federal Council's position on greenwashing prevention in the financial sector of 16 December 2022, the existing AMAS and SBA versions were clarified and supplemented:
Self-regulation on transparency and disclosure for sustainability-related collective assets (AMAS, April 2024)
They will enter into force on September 1, 2024 with corresponding transition periods.
- Swiss financial institutions are increasingly aligning their business models with the Paris Climate Agreement by embracing initiatives such as the Glasgow Financial Alliance for Net-Zero (GFANZ), the Net Zero Banking Alliance (NZBA) and the Net Zero Asset Managers Initiative (NZAMI), as well as the UN Principles for Responsible Banking (PRB) and Principles for Responsible Investment (PRI), in relation to their banking and investment activities respectively.
SBA and AMAS have joined the Net Zero Banking Alliance and Net Zero Asset Managers Initiative as supporting institutions and encourage their members to join net-zero alliances and sustainability initiatives.
SBA, AMAS, SIA (Swiss Insurance Association) and SSF commissioned PwC Switzerland to carry out a study of the current state of the Swiss financial sector’s commitment to the net-zero target, which was published in August 2022 as Setting Sail for a Carbon-Neutral future: Net Zero Insights 2022. - The Federal Council adopted published a reference document in December 2022: Sustainable finance in Switzerland – Areas for action for a leading sustainable financial centre, 2022–2025.
- The federal government, through the State Secretariat for International Finance (SIF), published its Swiss Climate Scores at the end of June 2022. Defined in partnership with the financial industry, the Swiss Climate Scores are a voluntary scheme that aims to establish good practices in disclosure, in order to make financial products compatible with climate objectives and encourage investment decisions that contribute to achieving these objectives. They consist of 6 indicators covering the current situation and the energy transition (forward-looking metrics).
All these bodies agree on the following core principles and objectives: transparency, good governance, risk management (especially climate risk), the need for quality reporting, and the importance of training and education.
Encourage excellence
As part of the revision of secondary professional education, modules on sustainable finance have been added to the Federal Certificate of Proficiency (CFC) in Commercial Business/Banking Sector. The Haute école de gestion de Genève (HEG) already offers a Certificate of Advanced Studies (CAS) in Sustainable Finance. The University of Geneva has offered a course on sustainable finance since 2011, as well as a graduate certificate in social responsibility and non-profits. The Institut Supérieur de Formation Bancaire (ISFB) has launched a Certificate in Sustainable Investment. Lastly, the SAQ Client Advisor Certificate, which is widely recognised as the industry standard, has strengthened the sustainability requirements since 2022.
Q&A
How can the economy become more sustainable?
Financial flows reflect what is happening in the economy more broadly. To make sustainability part of their investment decision-making, financial institutions need access to information about the companies they invest in. For many Swiss companies, however, information about sustainability is still lacking. Some guidance on how to fill this gap is provided by the Task Force on Climate-related Financial Disclosures (TCFD), the European Directive on the publication of non-financial information (Non-Financial Reporting Directive – NFRD) and the standards for sustainability reporting developed by the Global Reporting Initiative (GRI).
