Financial market makes progress in terms of climate compatibility
Published: Thursday, Nov 7th 2024, 12:10
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The Swiss financial market sector is doing more and more to make its activities climate-friendly. But there is still room for improvement. This is shown by a federal government test in which 146 financial institutions took part voluntarily.
A majority of 60 percent of financial institutions reflect the net-zero climate target in their corporate strategy, the Federal Office for the Environment (FOEN) wrote on Thursday about the results. In 2022, this figure was still less than a third.
At the same time, only 14% of institutions currently state that they want to align their portfolios with the climate target. The efforts undertaken are not yet in line with the net zero target everywhere, the FOEN stated.
Still a long way to go
With the expanded "Swiss Climate Scores", the Federal Council also recommends that from 2025 all financial products should indicate whether they are climate-friendly or not. This is key to Switzerland becoming a leading location for sustainable financial services.
According to the FOEN, the next step for the majority of financial institutions must now be to underpin their climate commitment with credible net zero transition plans for all business activities and implement effective measures. In addition, the proportion of financial institutions with net zero targets and strategies should continue to rise sharply.
Voluntary test
The climate test for the financial sector took place for the fourth time in 2024 after 2017, 2020 and 2022. The test was carried out using the Pacta (Paris Agreement Capital Transition Assessment) method, a standardized analysis for global equities, corporate bonds and credit portfolios.
This involves comparing the production plans of the companies in the portfolios with a development that the International Energy Agency believes is necessary to limit maximum global warming to 1.5 degrees. 146 financial institutions took part in the voluntary test, including 71 pension funds, 15 insurance companies, 34 banks and 26 asset managers. According to the Swiss government, the results are significant for the entire Swiss financial market.
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