The global financial system has a strong influence on the future of our planet. By directing finance flows into sustainable activities (sustainable finance), the finance industry has great potential to change markets and contribute to shaping economic systems in a sustainable way. The Swiss financial centre plays a leading global role in this area and is therefore making a positive contribution.
The role of the Swiss Bankers Association
Swiss financial institutions are global leaders when it comes to their sustainable finance offering and distributing investment products in this segment. Switzerland is on course to become a premier international hub. However, this is not something the sector can achieve on its own. All financial market stakeholders must work together to achieve this goal.
In September 2018, the Board of Directors of the Swiss Bankers Association (SBA) decided to make sustainable finance one of the SBA’s strategic priorities. The SBA published its first position paper on the topic in September 2019, which was then updated in June 2020. The paper outlines the ideal political framework conditions for enabling Switzerland to become a hub for sustainable finance. Together with the members of the Sustainable Finance working group, employees of the SBA also developed guidelines for the advisory process for private clients. For the broader public, the administration and other stakeholders, the SBA has published a brochure containing background information and its fundamental positions on the matter.
As the umbrella organisation of the Swiss banks, the Swiss Bankers Association actively advocates for the removal of existing regulatory hurdles in Switzerland and further improving the overall framework conditions for sustainable investment products. To this end, the SBA is in dialogue with all the relevant stakeholders in the sector, the authorities and civil society.
The global financial system has an important role to play in implementing the United Nations' Agenda 2030 (Sustainable Development Goals) and the Paris Agreement. These intergovernmental agreements aim to secure the livelihoods of future generations by enabling a shift towards a sustainable economy and society.
A financial system is considered sustainable if it financially supports and accelerates the transition of the economy and society towards sustainability. The financing of a sustainable economy requires that the financial system facilitates the transition to sustainability and at the same time reduces the financing of harmful activities. Clean energy, resource-efficient infrastructures and nature conservation are just a few examples of the areas for investment of a sustainable economy. Both public funds and private finance flows are important and must make a significant contribution to financing the future.
Sustainable finance refers to any type of financial service that integrates environmental, social and governance (ESG) criteria into business or investment decisions for the sustainable benefit of clients and society as a whole.
Sustainable finance as an opportunity for the Swiss financial centre
Social and environmental factors are becoming increasingly important for investors and therefore play a central role in investment behaviour. Sustainable finance is on its way to becoming the new norm for investments in the Swiss financial centre. This is impressively demonstrated by Swiss Sustainable Finance's figures on sustainable investments in Switzerland over the past few years.
Sustainability affects the activities of banks in all relevant areas of business (wealth and asset management, lending, etc.), in their interaction with customers, as employers and in their public perception. In order to become more sustainable and to take advantage of the associated business opportunities, financial actors must systematically integrate sustainability factors into financing and investment decisions. Examples of relevant sustainability factors, so-called ESG criteria (environmental, social and governance), are climate change, water use, child labour and the effectiveness of management structures to ensure good corporate governance.
Sustainable investments can achieve doubly positive results. On the one hand, they have great potential on the business side and, on the other, the financial sector is making a concrete contribution to achieving global climate targets and a sustainable economy. The financial system in Switzerland, with its diverse range of stakeholders and its technical expertise, can play a leading role in the area of sustainable finance and take advantage of these opportunities.