Finance

Environment – ​​Finance and “greenwashing”, the Federal Council walks on eggshells

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The government wants to fight against the “greenwashing” of the Swiss financial center and promote sustainable investments, while being careful not to be too restrictive.

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Is the Federal Council going to war against financial greenwashing? In any case, this is what he claims in a press release published on Wednesday in which the government says it wants to “make Switzerland a world leader in terms of sustainable investments”, while specifying that it has “adopted various measures during its meeting ” of the day.

The idea is to make Swiss finance more transparent about its environmental impacts based on recognized and clear assessment criteria, using “comparable and meaningful climate compatibility indicators” (read box)write the authorities.

The objective is to prevent companies from investing in areas that pollute the planet while they are also boasting about their efforts in terms of ecology, a discourse denounced as being greenwashing or greenwashing.

Recommendations and invitations

However, the measures taken by the Confederation do not seem very restrictive. The Swiss government “recommends” financial market operators to create transparency, it “invites” the sector to join international alliances and it “intends to encourage” the conclusion of agreements.

The Federal Council also indicates that the Swiss financial center must be a credible player at the global level in the field of the environment “for investors who wish” to make a contribution. It further specifies that, in this area, “the State must, as far as possible, retain its subsidiary role”.

Reports for the end of 2022

In addition, the Swiss authorities tell us, the Departments of Finance and the Environment (DFF and DETEC) will have to present a report by the end of 2022 on the status of the implementation of the above recommendations by the sector. financial institution and, ‘if necessary’, to submit proposals for measures to it.

The Federal Council has also instructed the two departments, in collaboration with the FINMA (Financial Supervisory Authority), to make proposals to it by the end of 2022 on how financial market law could be adapted, in particular by in terms of transparency, to avoid greenwashing.

On Twitter, National Councilor Gerhard Andrey (Les Verts/FR) regrets that the Federal Council is taking “its time to establish binding rules and [fasse] confidence in self-regulation.” “Without the weight of the Confederation, Switzerland will not occupy first place in the world”, he warns.

The Federal Council also announced on Wednesday that it had adopted a report on measures against greenwashing financial and indicated that the authorities were not standing idly by. The climate compatibility test, known as PACTA, carried out on a voluntary basis with financial institutions, constitutes an important basis for this report, writes the government. PACTA is the abbreviation of Paris Agreement Capital Transition Assessment. This is an internationally standardized test pattern. The participants of the Swiss financial market had their portfolios analyzed for the climate compatibility for the last time in 2020. This test was carried out on the initiative of the Federal Office for the Environment (FOEN) and in collaboration with the Secretariat of the State to International Financial Matters. It showed that more concrete measures were needed in the financial sector so that the financial center could make a contribution to the achievement of climate objectives. The next PACTA test will take place on a voluntary basis in early 2022.

The Federal Council decided again on Wednesday to create a basis for the issuance of green federal bonds (green bonds). These loans allow the issuer to raise funds. Unlike traditional loans, the capital raised through green loans cannot be used freely. They can only be used to (re)finance projects having a positive effect on the environment, for example the promotion of renewable energies, the increase in energy efficiency, the maintenance of biodiversity or the construction of respectful buildings. of the environment. The Federal Council has decided to lay the foundations that will allow the Confederation to also issue green bonds and encourage private sector players to do the same. On their own, green federal borrowing will have no direct environmental impact, the government says. Political decisions are needed in order to adopt concrete measures which will have direct effects for the protection of the climate and the environment.

(Communication / JBA)

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