12.1 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. With the Omnibus Initiative, the EU aims to simplify certain regulations, including the EU Taxonomy.

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, establishing guidelines on the creation and transparency of sustainable products, as well as rules for client advisory services related to investments. The Swiss Bankers Association (SBA) has in particular published guidelines for financial service providers on the integration of ESG preferences and ESG risks into investment advice and portfolio management (2023/2024). The Asset Management Association Switzerland (AMAS) has developed a self-regulation on transparency and disclosure for sustainable collective investment schemes (2023/2024). According to this self-regulation, the mere application of the sustainability approaches ESG integration or exclusion does not qualify as a sustainable investment; at least 70% of the assets must pursue the investment objective of alignment with or contribution to sustainability goals, the fund contract or prospectus must state sustainability objectives, key performance indicators must be used to measure progress toward achieving the sustainability objectives, and reporting must be provided on the achievement of the sustainability objectives. The Swiss Insurance Association (SIA) has also introduced self-regulation to prevent greenwashing in sustainable unit-linked life insurance products, and the Swiss Pension Fund Association (ASIP) has issued an ESG reporting standard (2022/2024) as well as ESG guidelines for pension funds (2022).