8.1 Current Landscape for International Investors
Sustainability is no longer considered a mere “nice-to-have” or a marketing exercise. Rather, it has become an integral part of risk/opportunity considerations and corporate strategies. Investors want to know how companies add value over the long term and how ESG factors influence a company’s financials. This “financial materiality” perspective also forms part of some sustainability reporting standards, such as the European Corporate Sustainability Reporting Directive (CSRD).
In recent years, sustainable investments in Switzerland have seen massive growth, reaching a volume of almost CHF 2,000 billion by the end of 2021. The decrease to around CHF 1,600 billion in 2022 is primarily attributable to market trends. In 2023, the market for sustainable investments experienced a slight recovery with overall growth of 3%, though this fell short of the broader market performance of around 15%. This could be partly due to changes in how sustainable investments are assessed, as well as a more conservative approach to what qualifies as a sustainable investment. For instance, some market participants indicated that they no longer classify investments that only follow an exclusion or ESG integration approach as sustainable investments. Around 51% of Switzerland’s total fund volume includes a sustainability component. Institutional investors account for 72% of sustainable investments.1
Development of sustainable investments in Switzerland
The most common approach in this area is to exclude certain securities from the investment universe that are not considered sustainable, such as ones in the tobacco and arms industries. The second most common approach is norm-based screening. Most investors align with the criteria of the UN Global Compact, followed by ILO Conventions, OECD Guidelines for Multinational Enterprises, and the UN Guiding Principles on Business and Human Rights. Thematic sustainable investments and impact investing saw a slight decline in 2023, while the best-in-class approach, under which ESG performance is evaluated relative to peers, experienced the highest growth with 30%.2
Development of sustainable investments in Switzerland
CHF billion (n=79)
% of total sustainability-related volumes applying respective approach
1 | Swiss Sustainable Finance (SSF), Swiss Sustainable Investment Market Study 2024 |
2 | Swiss Sustainable Finance (SSF), Swiss Sustainable Investment Market Study 2024. |