The importance of sustainability and areas for action
The global financial system has a considerable influence on the future of our planet. By directing finance flows into sustainable activities (“sustainable finance”), the financial industry has great potential to change markets and contribute to shaping economic systems in a sustainable way. The Swiss financial centre plays a leading international role in this area and is making its own contribution through various initiatives.
Importance of sustainable finance
Sustainable finance refers to any type of financial service that integrates environmental, social and governance (ESG) criteria into business or investment decisions for the lasting benefit of clients and the society as a whole. A financial system is considered sustainable if it financially supports and accelerates the transition of the economy and society towards sustainability. To finance a sustainable economy, the financial system must facilitate the transition to sustainability and at the same time reduce funding of harmful activities.
At the international level, Switzerland, a member of the United Nations, supports the Sustainable Development Goals (SDGs) and has ratified the Paris Agreement on Climate Change. These intergovernmental agreements aim to secure the livelihoods of future generations by promoting a shift towards a sustainable economy and society.
At the national level, the Federal Council set the goal in 2019 of achieving net-zero greenhouse gas emissions by 2050. In 2020 it also published a report and guidelines on sustainability in the financial sector intended to further strengthen the Swiss financial centre’s position as a premier hub for sustainable finance.
The financial system plays an important role in implementing climate and sustainability goals. Sustainability affects the activities of banks in all relevant areas of business: wealth and asset management, lending and financing, the capital market and share issuance. It also colours their interaction with customers, their standing as employers and the public’s perception. In order to become more sustainable and take advantage of the associated business opportunities, financial actors must systematically integrate sustainability factors into financing and investment decisions.
Back in September 2018, the Swiss Bankers Association (SBA) decided to make sustainable finance one of its strategic priorities (see the relevant brochure and also principles and recommendations). As the umbrella organisation of the Swiss banks, the SBA is actively lobbying for existing regulatory hurdles to be dismantled in Switzerland and the framework conditions for sustainable financial products in general to be further improved. The SBA sees the Federal Council’s goals as an opportunity for the Swiss financial centre and wants to play an active role in achieving these goals.
Initiatives by the Swiss Bankers Association
As it establishes a leading position in the field of sustainable finance and makes an effective contribution towards sustainability, the SBA has actively engaged in various initiatives in recent years. In 2020, for example, the SBA and its members drew up a Guideline for the integration of ESG considerations into the advisory process for private clients, and in August 2021 published a joint report with Boston Consulting Group (BCG) on Investment and financing needed for Switzerland to reach net zero by 2050. In February 2022 it also published a discussion paper on climate-friendly mortgages.
The SBA has adopted an action plan for a consistent and forward-looking transition to a more sustainable future:
- Voluntary self-regulation: By introducing new self-regulation, the SBA is defining a minimum standard for its members designed to strengthen competitiveness and credibility in this area by delivering high-quality advice. Specifically, the SBA formulates binding criteria for members in the advisory process, both on the investment and financing side. When it comes to the sustainability of financial products, the SBA supports the standards established by the Asset Management Association Switzerland (AMAS).
- Net-zero initiatives: The SBA considers the net-zero initiatives to be effective instruments for achieving the 2050 climate goals. It advises members to join international net-zero alliances and sustainability initiatives in the banking domain. The SBA itself has been a member (supporter status) of the Net-Zero Banking Alliance since 12 April 2022.
- Training: The SBA and Swiss banks are integrating ESG skills consistently in the education and training they provide. The SBA has set the goal that all client advisors should have suitable knowledge of ESG and deploy this expertise in the advisory process.
In order to implement the measures successfully and achieve the best possible outcomes, the SBA is in regular dialogue with all relevant stakeholders in industry, public authorities, federal government, leading associations, NGOs and civil society.
Links & Documents
Guidelines for the financial service providers on the integration of ESG-preferences and ESG-risks into investment advice and portfolio management (2022)
SBA and BCG Study: Sustainable Finance – Investment and financing needed for Switzerland to reach net zero by 2050 (2021)
Guideline for the integration of ESG considerations into the advisory process for private clients