The Swiss Government has become an official supporter of the Task Force on Climate-related Financial Disclosures (TCFD) as it prepares to embed the recommendations in law.
The country recently adopted a sustainable finance policy that will see lawmakers draft a bill to make the TCFD guidelines ‘binding’ and consider amendments to existing financial market legislation to prevent greenwashing in 2021. It is not yet known whether the new rules will be enforced on a comply-or-explain basis or made mandatory.
In addition, the government has recommended that asset managers disclose the extent to which they consider climate and environmental risks in their investment strategies. A survey, scheduled for the end of 2022, will assess industry compliance with these recommendations.
As part of the renewed push on sustainable finance, the government will also look into hosting a future UN climate conference in the country.
Efforts to draft the TCFD disclosure bill are due to begin soon with scheduled consultations with the Swiss private sector and trade associations. In the meantime, companies have been instructed to make voluntary TCFD-aligned disclosure to prepare for the incoming regime.
At the same time, Swiss companies are contending with enhanced due diligence over conflict minerals and child labour, and sustainability reporting in line with the EU’s Non Financial Reporting Directive as a result of a national referendum on corporate supply chain disclosures carried out last year.
If successful, the government initiatives to strengthen climate and environmental disclosure could catalyse an increased demand for sustainably invested funds which currently represent only a small fraction of the Swiss market.
Research by the Institute of Financial Services (IFZ) has found that ESG funds make up less than 6% of all Swiss mutual funds. Out of the country’s 24 cantonal banks – regional lenders owned by the Swiss Government – only nine institutions offer their own ESG funds.