2021 will see the introduction of several regulatory initiatives in both Switzerland and Europe focusing on climate risks, the prevention of greenwashing and responsible corporate behavior. Policy makers are predominantly relying on measures that increase transparency for investors, clients and regulators.
The demand for sustainable investment products and services in the financial services industry have been rising in recent years. It therefore comes as no surprise that authorities are becoming increasingly interested in this area, with noticeable effects in the regulatory arena. 2021 will mark the departure from the current “laisser-faire” approach of Swiss authorities to Sustainable Finance. Financial institutions will need to brace themselves for more regulation that has one common goal: to increase transparency for investors, clients and regulators.
On 12 January 2021, the Swiss Government communicated that it now officially supports the Task Force on Climate-related Financial Disclosures (TCFD), thus making clear once more that it is serious about its environmental ambitions. In the context of its financial market strategy, the Swiss Federal Council is currently preparing to turn the recommendations into law. Various projects are already running:
For more information on TCFD, read our recent blog on the topic.
The risk of greenwashing has been a concern for both Swiss and European regulators and has been amplified by the increasing popularity of ESG investment products on offer to retail clients.
There are several broader regulatory initiatives which will impact not only financial institutions but Swiss firms in general. Here is a quick round-up:
Much is happening on both the market and regulatory levels to address growing concerns and an increasingly palpable sense of urgency regarding both climate as well as societal challenges. While much is underway in the EU to put in place explicit regulatory duties and definitions, Swiss institutions not operating in the EU are currently faced with much more leeway (and uncertainty) as to how and how far they should integrate sustainability considerations. However, the great number of initiatives demonstrates that sustainable finance is no longer just a niche but represents the way forward to the new normal.
To get a quick idea where your firm currently stands on its sustainability journey, try our 10-minute health check for banks and asset managers.