Swiss Government Enhances Climate Disclosure Guidelines for Financial Products

The recent announcement by the Swiss government regarding updates to the voluntary climate disclosure guidelines for financial products has introduced the ‘Swiss Climate Scores’. These updates, initially launched in 2022, have the primary objective of bolstering the credibility and climate transparency of the Swiss financial centre. The Federal Council has committed to regularly reviewing the guidelines to ensure they remain aligned with the latest developments.

The updated guidelines are primarily intended for asset managers, banks, and insurance companies, aiming to provide institutional and private clients with comparable and meaningful information regarding the compatibility of their financial investments with international climate goals. The recent enhancements to the Climate Scores include optional questions on climate-related investment objectives, necessitating the disclosure of exposure to both renewable energies and fossil fuels.

To simplify the implementation of the guidelines for industry participants and to enhance their clarity for investors, certain aspects of the Climate Scores have been refined, as highlighted in a government statement. The new optional questions focus on climate goals and aim to determine if the portfolio aligns with the temperature-capping goals of the Paris Agreement and whether investing in the portfolio contributes to the mitigation of climate change. Financial institutions are required to provide a basis for their assessment in both cases.

The development of the Climate Scores was carried out in close collaboration with the Swiss financial sector and non-profit organizations, drawing heavily on existing international frameworks to avoid redundancy. Notably, the guidelines are aligned with the principles of the Glasgow Financial Alliance for Net Zero (GFANZ) and the Taskforce for Climate-related Financial Disclosures (TCFD).

It is important to note that the use of the Climate Scores is voluntary, although there is a possibility that they may be integrated into anti-greenwashing regulation that the Swiss finance ministry is currently working on. The finance ministry’s international finance secretariat is scheduled to evaluate the voluntary uptake of the Scores next year, and it is anticipated that the majority of Swiss financial institutions will adopt them. UBS has already taken the lead by publishing the first Climate Scores for 60 of its Switzerland-domiciled equity and bond funds last month.

Overall, the Swiss government’s initiative to enhance climate disclosure guidelines for financial products is a significant step towards reinforcing transparency and accountability in the country’s financial sector, aligning with global efforts to address climate change. The updates are expected to provide investors with valuable insights into the environmental impact of their financial investments, aiding them in making more informed decisions.