On the initiative of the Federal Office for the Environment (FOEN), Swiss financial market players have analyzed the climate compatibility of their portfolios. A total of 133 establishments took part in the PACTA climate compatibility test. Conclusions: Financial institutions’ portfolios have made progress in terms of climate, but improvements are still needed.
The test shows that progress has been made towards meeting the climate objectives of the Paris Agreement. A third of respondents have a climate strategy and set concrete targets for 2050 or earlier.
Investments in fossil fuels have fallen compared to the last test in 2020. A third of the properties tested are heated with renewable energy, compared to a quarter in 2020. Pension funds say they want to increase this share by a quarter, and 15% insurance.
Energy rehabilitation of buildings
In the mortgage sector, around one in ten creditors offer incentives for building energy upgrades. The financial market plays a role in the energy transition, stresses the FOEN.
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The financial centre, on the other hand, has not fully exploited its leeway in the area of energy improvements. Investments in companies extracting fossil agents are continuing, further notes the FOEN. For the office, a coordinated dialogue could encourage companies to adapt their transition plans. It proposes a corresponding standard to support the climate effort.
Greenpeace calls for state intervention
“The investments of the Swiss financial center are still not compatible with the objective of avoiding at all costs to exceed the tipping points of the climate system”, criticizes Friday Peter Haberstich, specialist in climate and financial markets at Greenpeace. In the eyes of the NGO, too many banks, wealth managers, insurance companies and pension funds are still investing in companies involved in sectors that are destructive to the climate. Voluntary measures lead nowhere.
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Only 15% of institutions have set themselves climate objectives with intermediate objectives for 2025 and 2030, the NGO is alarmed. Only a few institutions are really and actively fighting against the climate crisis. But they must encourage the companies in which they invest to reduce their emissions, still asks Greenpeace. Intervention by the political authorities is necessary. We must set binding climate objectives with a scientifically based reduction trajectory for greenhouse gas emissions. Financial actors must account for their progress in complete transparency, the NGO believes.
“Irresponsible behavior”, denounces the WWF
The reaction is hardly different at the Swiss WWF. “Investing in companies that continue to promote fossil fuels (…) is irresponsible behavior. It is high time for the Swiss financial center to participate in the national commitments made within the framework of the Paris Agreement on the climate”, declares Stephan Kellenberger, expert in sustainable finance at WWF Switzerland in a press release from the organization.
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In Switzerland, financial institutions still heat two-thirds of their building stock with fossil fuels. The FOEN report shows that between the promises of the financial sector and the measures actually implemented, the gap is huge, reacts the Swiss WWF. In addition to financial actors, those in politics are also called upon to react so that the former finally take the path of climate neutrality.
The Swiss Climate Alliance further reveals that the Swiss National Bank (SNB) has slipped in the ranking of central banks. It obtained significantly worse results, as did the Swiss Financial Market Supervisory Authority (FINMA).
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Compared to 2021, Switzerland lost three places and fell to “a less than glorious eleventh place”, writes the alliance in a press release. It ranks in the second half of the list, far behind the rest of the European countries. The Climate Alliance calls on Parliament to take responsibility and correct “the SNB’s mispositioning”.
The next compatibility test is scheduled for 2024. Participants are free to use the results internally only or publish them.