Self-regulation in sustainable finance
The Swiss Bankers Association (SBA) has undertaken a number initiatives in recent years to help the Swiss financial centre establish a leading international position in the field of sustainable finance and make an effective contribution towards sustainability. As the umbrella organisation of the Swiss banks, the SBA is actively lobbying for the framework conditions for sustainable financial products to be continuously improved. Industry initiatives play a key role here. A prime example is the new self-regulation introduced in the area of Sustainable Finance.
New minimum requirements for integrating sustainability criteria into investment and mortgage advice
The new guidelines define binding rules for integrating sustainability criteria into investment advice and portfolio management, as well as mortgage advice. By making sustainability themes – in other words, environmental, social and governance (ESG) factors – and energy efficiency an integral part of the advisory sessions with private clients, the industry is making a concrete and important contribution not only towards the achievement of the Paris climate goals, but also to the further strengthening of Switzerland’s position as a premier sustainable finance hub.
Both sets of guidelines are binding for SBA members with effect from 1 January 2023, although various transition periods are specified to allow banks to adapt their internal processes. The guidelines will be regularly reviewed in light of market developments and updated as necessary. Non-members can adopt the guidelines on a voluntary basis.
Guidelines for financial service providers on the integration of ESG preferences and ESG risks into investment advice and portfolio management
In the area of investment, the financial industry has the biggest leverage when it comes to Sustainable Finance. According to the latest report published by Swiss Sustainable Finance, total sustainable investment volumes climbed to CHF 1982.7 billion in Switzerland in 2022. Swiss financial service providers have been offering suitable products and services for some time now.
The legal basis for the new “Guidelines for financial service providers on the integration of ESG preferences and ESG risks into investment advice and portfolio management” is the Financial Services Act (FinSA). In future, clients will be asked about their ESG preferences, and then offered appropriate products and services. The guidelines also set out obligations for the provision of information, documentation and accountability when establishing the client’s ESG preferences. Members are also obligated to include ESG topics in the training and professional development of their client advisors. By offering clients professional and transparent advice on sustainable investments, financial service providers play an important role in preventing greenwashing. The new guidelines are binding and replace the existing "Guideline for the integration of ESG considerations into the advisory process for private clients".
Guidelines for mortgage providers on the promotion of energy efficiency
The purpose of the “Guidelines for mortgage providers on the promotion of energy efficiency” is to encourage mortgage providers to consider long-term value retention, and consequently the energy efficiency of the building to be financed, when offering clients advice on financing a property. The intention is to make clients aware of the importance of energy efficiency upgrades. The initial focus is on advice to private individuals seeking finance for single-family and holiday homes. This advice should also include information about expected upgrade requirements for the property in future, as well as details of independent specialist agencies able to offer specific guidance. Members also undertake to provide appropriate and regular training for their client advisors regarding long-term value retention and improvement of energy efficiency.
Various questions have arisen regarding the Guidelines for mortgage providers on the promotion of energy efficiency. These are answered below:
No. The "Guidelines for mortgage providers on the promotion of energy efficiency" make no mention of the CECB. It is up to the politicians to decide whether the certificate should be made compulsory.
The Guidelines for mortgage providers on the promotion of energy efficiency do not stipulate how the money from the mortgage is to be used. It goes without saying that clients continue to have the freedom to decide how they invest.
We do not see any disadvantages here, only benefits for clients. The SBA and its members want to ensure that clients receive the best possible advice, and that includes advice on sustainability issues. The Guidelines state that mortgage advice should include a discussion on value retention and thus also the energy efficiency of the financed property. If a bank informs borrowers about available subsidies as part of this advice, we see no detrimental effect on costs or margins – only added value for clients. Moreover, the mortgage market is extremely efficient and competitive, so all mortgage clients always have a broad choice of providers.
Links & Documents
Guidelines for the financial service providers on the integration of ESG-preferences and ESG-risks into investment advice and portfolio management (2022)
Onepager: Self-regulations in Sustainable Finance