During its meeting on June 24, 2020, the Swiss Federal Council adopted a report and guidelines on sustainability in the financial sector. The report provides an overview of the international developments and the position of Switzerland with respect to sustainable finance. The report focuses on environmental aspects and examines thirteen measures for sustainability in the financial sector in detail, some of which are also being discussed in the EU. The measures primarily concern transparency, investment activities, training and further education, and risks. The Federal Council has published corresponding guidelines based on the report presented. In addition, FINMA notified that it is addressing the subject of climate-related financial risks as part of its supervisory remit. It is also reviewing regulatory approaches for improved transparency regarding climate-related financial risks by major financial institutions.
Federal Council wants to review the regulatory framework for optimization potential, expand its international commitment, and intensify exchanges with the parties involved. To achieve the aim of making Switzerland a leading location for sustainable financial services, the Federal Council wants to shape the framework conditions to improve competitiveness of the financial center in Switzerland while ensuring that the financial sector can make an effective contribution to sustainability. The framework conditions for the Swiss financial center in the area of sustainability have been identified and will be further developed by the end of 2020. These include the following:
- Information for market participants—Environmental and climate information for financial products and companies, including financial institutions, should be made available to all market participants in a systematic and comparable way.
- Quality of information—The chosen reporting standard is to be measured against the traceable and effective achievement of sustainability goals in accordance with the 2030 Agenda reference framework.
- Quality of service—Informed advice, a high level of training and further education in the sector, and products that are efficiently and effectively geared to achieving sustainability goals are key factors on the supply side.
- Innovation—In general, including in the three areas mentioned above, the use of digital business and analysis models plays a central role.
- Risk pricing—Financial risks from environmental and climate developments must be identified. This also includes the long-term perspective and developments during the transition and adaptation phase.
- Exportability—International developments, especially in EU, must be closely monitored to identify at an early stage which steps are necessary to maintain competitiveness. Switzerland remains committed to the exportability of high-quality financial services, which makes the sustainability of Swiss financial services transparent in the international context.
- Press Release of Swiss Federal Council
- Press Release of FINMA
- Report (PDF in German)
- Guidelines (PDF)
Keywords: Europe, Switzerland, Banking, Insurance, Securities, Sustainable Finance, ESG, Climate Change Risk, FINMA, Swiss Federal Council
Dr. Denton provides industry leadership in the quantification of sustainability issues, climate risk, trade credit and emerging lending risks. His deep foundations in market and credit risk provide critical perspectives on how climate/sustainability risks can be measured, communicated and used to drive commercial opportunities, policy, strategy, and compliance. He supports corporate clients and financial institutions in leveraging Moody’s tools and capabilities to improve decision-making and compliance capabilities, with particular focus on the energy, agriculture and physical commodities industries.
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