Swiss Financial Institutions Obliged to Report Publicly on Climate Issues
In an effort to promote transparency and sustainability, Switzerland has introduced regulations requiring large financial institutions to disclose their climate-related financial risks and environmental impact.
Reporting Requirements
Starting from January 2024, companies with total assets of over CHF 1 million or turnover of more than CHF 40 million will be required to publish public reports on their climate-related activities. These disclosures will cover both the financial risks associated with climate change and the impact of their business operations on the environment.
Regulatory Guidance
The Swiss Financial Market Supervisory Authority (FINMA) has been actively involved in this area, issuing guidelines and recommendations for large banks and insurance companies to provide qualitative and quantitative information on their climate-related financial risks. FINMA has also analyzed how these institutions disclose their climate-related financial risks and published guidance on preventing and combating greenwashing.
Aligning with EU Regulations
The Swiss government is expected to further align its reporting obligations with the European Union’s Corporate Sustainability Reporting Directive, which will extend the scope of application and introduce an audit requirement.
Consumer Protection in Switzerland
While there is no specific consumer protection framework in place, financial institutions are required to observe mandatory provisions that protect consumers. For example:
- Loans granted to individuals for personal purposes must comply with a maximum interest rate set by authorities and include certain information.
- In international transactions with consumers, specific rules may apply regarding the determination of competent jurisdiction.
Future Changes in Swiss Financial Regulation
FINMA is planning to strengthen Switzerland’s position as a leader in fintech innovation. The regulator is working on an amendment to federal acts to address developments in distributed ledger technology and introducing ledger-based securities represented in blockchain.
Additionally, Switzerland has entered into an agreement with the United Kingdom on mutual recognition of financial services, aiming to foster competitiveness and cooperation between the two jurisdictions.
In light of the Credit Suisse crisis, FINMA is calling for stricter regulation of systemically important financial institutions (SIFIs) and additional measures to increase its influence on their governance. A report highlighting the lessons learned from the crisis has been published, urging regulatory reform.
Conclusion
Overall, Switzerland’s financial regulatory landscape is expected to evolve in response to international developments and domestic needs, with a focus on promoting innovation, protecting consumers, and addressing climate-related risks.