Self-regulation works too

If something in society is not functioning as it should (or at least if people think so), many will be quick to call for state regulation. On the face of it, this is understandable because the State is obliged to be neutral and has the requisite resources. If we look closer, however, we sometimes find grounds for doubt. The resources to implement regulation can’t be conjured up out of nowhere, and new rules need to be robust and based on facts. This is where self-regulation comes in: the State defines a framework, but it leaves the specifics to the stakeholders involved. A study by HSLU on the implementation of the SBA’s guidelines for sustainable investment solutions proves that this approach can work.

Triggered by concerns over greenwashing 

If we cast our minds back a few years, we can remember that “greenwashing” was something of a buzzword. There were so many aspects to consider that experts found it hard to identify clear evidence of greenwashing even in simple consumer goods, and things were more complex still when it came to sustainable investments. The Federal Council steered the debate in a clear direction with its position paper at the end of 2022, which also set out its specific expectations for the financial sector. 

The sector responded quickly. Having seen shortly before how an ostensibly well-meaning regulatory project had created a monster in the EU, the industry associations – the SBA, the Asset Management Association Switzerland and the Swiss Insurance Association – revised their recently introduced self-regulation to take account of the Federal Council’s position. The general public may have seen this as the end of the story, but for the Swiss banks it was in fact a trigger for comprehensive changes.

Implemented swiftly 

When the Federal Council acknowledged the revised self-regulation in June 2024, banks, asset managers and insurers had a lot of work to do. The SBA therefore commissioned HSLU to carry out a survey on how things were progressing at the end of September 2025. The findings clearly show that the industry followed up its words with deeds. Some 86% of banks had already fully implemented the first version of the self-regulation for portfolio management. The revised guidelines had been implemented by 42%, while a further 42% were still working on implementing them at the time of the survey. 

The fact that the self-regulation is principles-based has probably played a key part in its success. Instead of micro-management, it favours clear guidelines and is only proscriptive where absolutely necessary. Switzerland’s banks have thus drawn the right conclusions from the excessively complex wording of the EU’s comparable Markets in Financial Instruments Directive (MiFID) II and deliberately kept the process of assessing customers’ environmental, social and governance (ESG) preferences simple. According to the HSLU study, 74% of institutions use only one or two questions. The proportion of customers who have expressed ESG preferences varies considerably between institutions, but the average is much higher than in the EU. 

It’s also striking that there are now more ESG investment solutions – i.e. those that take ESG criteria into account but don’t necessarily qualify as sustainable – on the market than there are conventional ones. A mere 11% of banks are still offering only the latter.

Challenges remain 

Contrary to what many critics have claimed, implementing the self-regulation is far from child’s play. Sustainability reporting in particular poses significant challenges for many institutions. For example, 87% of banks report difficulties with regard to presenting information in a form that’s clear, transparent and easy to understand. A lack of uniform standards results in a much greater workload than for classic financial reporting. Nevertheless, the findings point to sustainability reporting increasingly establishing itself as an industry standard. This represents an important step towards improving comparability and credibility.

A wise decision 

Overall, the study shows that the banks in Switzerland have made a great deal of progress as regards integrating ESG criteria into their investment solutions. The Federal Council’s decision in June 2024 to refrain from introducing state regulation to combat greenwashing in the financial sector therefore seems to have been a wise one, especially in view of the speed and breadth with which the self-regulation has been implemented. The system naturally needs time to prove its worth, but it has got off to a good start – indeed, a much better one than could have been hoped for with state regulation.