The Swiss financial sector could play a significant role in supporting the government to meet its international climate commitments while strongly positioning Switzerland as a hub for sustainable finance.
In 2017, pension funds and insurance companies - representing two thirds of the total Swiss market in terms of assets under management - were invited to assess the climate impact of their investments. The results showed that their investment portfolios supported a global temperature rise in the range of 4-6 degrees Celsius. The Paris Climate Agreement aims to keep global temperature rise well below 2 degrees Celsius.
Consequently, the Swiss Government announced on 16 March to intensify the engagement work already initiated with the financial industry.
The importance of natural capital
One of the objectives is to develop methodologies that support the integration of natural capital information into financing and investment strategies. Institutional investors have understood the value this could bring, not only to the environment, but also to investment performance. Investors, however, need better and more comparable and complete information about climate change. Such reliable data on climate risks and opportunities could profoundly change the way investment decisions are made.
Working together
The engagement will be led by the State Secretariat for International Financial Matters and the Federal Office for the Environment. Meanwhile, the government will implement the recommendations of the industry-led Task Force on Climate-related Financial Disclosures (TCFD) established in 2015 by the Financial Stability Board under the auspices of the G20.
The TCFD developed four widely adoptable recommendations, which were published in June 2017. Applicable to organizations across sectors and jurisdictions, the recommendations are structured around:
- governance
- strategy
- risk management
- metrics and targets
Financial resilience
The Swiss Federal Council sees this as an opportunity to raise the profile of Switzerland as a financial centre in a very competitive international environment. With one third of sustainable investments originating from the country in 2016, Switzerland is positioned to build a first class 21st century finance sector, which understands and is equipped to manage the risks and opportunities of future climate change, and at the same time contribute to building a resilient Swiss economy.
Sources:
https://www.admin.ch/gov/en/start/documentation/media-releases.msg-id-70127.html
https://www.letemps.ch/economie/lexpertise-durable-geneve-nest-reconnue-letranger
https://www.fsb-tcfd.org/wp-content/uploads/2017/06/FINAL-TCFD-Report-062817.pdf
Crédit photo: https://pixabay.com/fr/investissement-finances-temps-3247252/
