The Federal Council’s new sustainable finance reports in context
On 16 December 2022, the Federal Council issued two publications on sustainable finance. The Swiss Bankers Association (SBA) welcomes the further development and clarification contained in “Sustainable finance in Switzerland – Areas for action for a leading sustainable financial centre, 2022–2025” and will continue to play its part in consolidating Switzerland’s position. With regard to greenwashing, the SBA still sees no immediate need for regulation, but will make a constructive contribution to work in this area.
The Federal Council published two documents today (16 December 2022): a report entitled “Sustainable finance in Switzerland – Areas for action for a leading sustainable financial centre, 2022–2025”, and a paper setting out its position on preventing greenwashing in the financial sector. The publications underscore the importance of sustainability, and detail the measures that have already been taken for the Swiss financial centre as well as others that are in the pipeline. Work that has already begun now has to start showing results, while planned activities need to be fleshed out and moved forward. That also applies to the approach to sustainability in general. In 2015, Switzerland declared its willingness to achieve the 17 UN Sustainable Development Goals (SDGs) by 2030. They should therefore always serve as a frame of reference when attempting to assess and define sustainability.
Areas for action for a leading sustainable financial centre
The sustainable finance report underscores the Swiss financial centre’s role in sustainability and highlights past and future areas for action. These are four in number: (1) sustainability data from all sectors of the economy, (2) transparency in the financial sector, (3) impact investments and green bonds, and (4) pricing pollution. A total of 15 specific measures fall under these four headings. As the report highlights, many of them have already been addressed.
The SBA welcomes the further development and clarification of the Federal Council’s position based on existing sustainable finance fundamentals, and their placement in the context of the 2030 Sustainable Development Strategy, climate policy and international developments. The additions to the principles and the focus on specific areas for action take due account of the financial centre’s role and can also offer guidance to Swiss financial market players. The SBA likewise supports the Federal Council’s objective of consolidating the Swiss financial centre’s position as a leading location for sustainable finance. With regard to the specific measures, the SBA is already actively involved in many of them and will continue to play its part in tackling the areas of action. On some points, however, it sees a need for further clarification and continuation of the dialogue between the authorities and the sector; one example concerns the review of amendments to financial market legislation to promote the expansion of impact investments in the “Impact investments and green bonds” area for action.
Avoidance of greenwashing
In its position paper on greenwashing prevention in the financial sector, the Federal Council has instructed a working group led by the FDF (SIF), along with DETEC, the EAER, FINMA as well as representatives of the sectors affected and of civil society, to examine the best options for implementing that position.
The SBA remains of the view that there is no immediate need for regulation. The issue of greenwashing is already comprehensively addressed through existing legislation, measures taken by the financial sector, and supervisory practice. In addition to Article 28 of the Swiss Code of Obligations, which provides general protection against fraud in contractual relationships, and the Unfair Competition Act, FINMA has published guidance on preventing and combating greenwashing in the fund segment together with rules of conduct at the point of sale. Additionally, the self-regulations published by the SBA and the Asset Management Association Switzerland (AMAS) along with the Swiss Climate Scores launched by the federal government and supported by the sector, are important tools for avoiding greenwashing. The SBA will work constructively on this issue with the SIF working group, with a view to establishing what action needs to be taken.
If – and only if – it emerges that action is indeed necessary, the next step will be to work with the sector on evaluating possible amendments to financial market legalisation to avoid greenwashing. The SBA’s view is that such actions should be based on the tried and tested principles of financial market regulation, and that account should be taken of the work already done by the sector, notably the self-regulations issued by the SBA and AMAS.
Sustainability is a dynamic, complex and, to a great extent, nebulous concept. The UN has acknowledged this fact, and has created an international framework in the form of the 17 SDGs, with a total of 169 sub-goals. Switzerland signed up to those goals in 2015, and should therefore take them as a frame of reference when assessing and defining sustainability.
A consistent, joint approach
In summary, the two Federal Council publications emphasise the importance of sustainable finance and focus on some necessary areas for action in terms of implementation. The SBA is convinced that the financial sector, as one of the drivers of sustainable development, has a contribution to make, and has defined sustainable finance as a strategic priority. The SBA has adopted a consistent, future-oriented approach encompassing a range of measures, including self-regulation and recommending to its members that they sign up to net-zero initiatives.
Ongoing dialogue and collaboration with other economic players, NGOs, academia, politicians and society at large will remain vital to achieving real progress towards sustainability and, in particular, climate goals.