10.1 Context of the Financial Industry as an Enabler of Sustainability Goals

The Paris Agreement (2015) and the UN’s Sustainable Development Goals (SDGs; 2016) are central elements in the global efforts toward a sustainable economy and society. These two global frameworks have driven both the EU and Switzerland to enshrine ambitious climate and sustainability goals in their respective legislation. The EU has adopted the “Green Deal”, a comprehensive plan to transform the economy, while Switzerland, notably through a public referendum, has enshrined the net-zero target in its Climate and Innovation Act. Furthermore, in response to the Responsible Business Initiative, the Swiss Code of Obligations was also updated to include due diligence and reporting obligations related to sustainability topics. 

Both Switzerland and other countries view the financial sector as a key enabler for translating the ambitious sustainability goals into action. What is also clear, however, is that the transition must ultimately occur in the sectors primarily responsible for the emissions. In its role as an intermediary, the financial sector can actively support its clients and, where necessary, apply pressure to ensure business models are aligned with national climate and sustainability targets and with the Paris Agreement. To this end, the EU has enacted a comprehensive sustainable finance framework. The core elements of the framework are the EU Taxonomy, which sets out the economic activities that qualify as “green”, and the Sustainable Finance Disclosure Regulation (SFDR), which establishes transparency requirements for how clients are informed about the sustainability of their investments. 

In Switzerland, the federal government has developed the Swiss Climate Scores to make it easier to compare the climate compatibility of funds. In its Guidance 05/2021 on preventing and combating greenwashing, FINMA set out its expectations and current practice regarding the management of sustainability-related collective investment schemes at fund and institutional level. The financial associations have introduced self-regulations for sustainable investments and mortgages, establishing guidelines on the creation and transparency of sustainable products, as well as rules for client advisory services related to investments and mortgages. Furthermore, the draft ordinance for the Climate Protection Act proposes that companies must develop a roadmap to achieve net-zero emissions under certain conditions. A similar requirement is also expected to be introduced for financial service providers in the Ordinance on Climate Reporting.