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 environmental, social, and governance (ESG) factors influence a company’s financials. This “financial materiality” perspective also forms part of some sustainability reporting requirements and standards, such as the European Corporate Sustainability Reporting Directive (CSRD) and the related European Sustainability Reporting Standards (ESRS).
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 developments. 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%.1 In 2024, the market continued to recover with a significant growth rate of 13% compared to the previous year, reaching nearly CHF 1,900 billion. This recovery is driven by several factors, including the expanded availability of sustainable investment products offered by Swiss retail and regional banks. Additionally, favorable market conditions in 2024 contributed to strong returns for sustainability-related investments. A generational shift also appears to be playing a role, as younger investors—who place greater emphasis on sustainability—are increasingly driving demand for these products.2
Development of sustainable investments in Switzerland2
in CHF billion
This figure includes only those participants in the data for 2023 and 2024 who took part in both years, in order to control for the influence of changes in participant composition on total sustainability-related volumes.
The most common approach related to sustainable investments is to exclude certain securities from the investment universe that are not considered sustainable, such as ones in the tobacco and arms industries. Contrary to the prior year, the second most common approach is ESG engagement, where shareholders aim to convince management to take sustainability criteria more into account. Norm-based screening, where alignment with international standards like UN Global Compact, OECD Guidelines for Multinational Enterprises or the UN Guiding Principles on Business and Human Rights are considered, is now fourth place, down from second. Integration of ESG risks and opportunities into financial analysis remains third. All sustainable investment approaches saw an increase in 2024. The most significant growth was observed in ESG engagement and climate-aligned investments, both of which grew by more than 30%.2
Development of sustainable investments in Switzerland2
CHF billion (n=78)
% of total sustainability-related volumes applying respective approach
Considering ESG factors in investment decisions requires sufficiently detailed disclosures on the part of companies. While Europe has traditionally led the field in ESG investing, investors in North America and Asia Pacific have adopted similar priorities in recent years. However, ESG investments, particularly in the US, are currently the subject of significant controversy and face political pushbacks. In the realm of an overall “ESG backlash”, the EU is introducing “Omnibus” simplifications to a series of regulations coming from the European Green Deal, in favour of protecting competitiveness and limiting compliance burden.
The global landscape is seen increasingly multipolar, with jurisdictions moving at different speeds and sometimes in different directions. Despite regulatory and political backlash in some countries, ESG investments continue to grow, supported by demand from institutional and retail investors. ESG remains relevant, covering topics such as climate and nature, human rights, employee relations, responsible value chains, anti-corruption, or cybersecurity. On the other hand, legal risks and concerns over fiduciary duties have also contributed to a more cautious approach among particularly US investors when accepting ambitious commitments. Globally, fear of climate litigation has led some financial institutions to exit initiatives like the Glasgow Financial Alliance for Net Zero (GFANZ).