An alliance of Swiss political parties, NGOs and financial industry representatives is demanding an amendment to constitutional rules to require pension funds, asset managers, banks and insurers to align their investments abroad with international standards on climate and biodiversity.
Launched this week, the initiative – Finanzplatz-Initiative (Initiative for a Sustainable Financial Center) – aims to collect 100,000 signatures in the next year and a half necessary to hold a referendum and enshrine a new set of rules on sustainability in the constitution.
Measures taken by the government on sustainable investing must be consistent in the future with international standards, and Switzerland’s international legal obligations, on climate and the protection and restoration of biological diversity, according to the text put forward by the initiative backers.
Pension funds, banks, and insurance companies have to align their business activities abroad, especially those with an impact on the environment due to greenhouse gas emissions, to internationally agree on temperature targets and international biodiversity targets, the text added.
The institutions will have to take into account direct and indirect emissions, and the impact of their activities on biodiversity along the entire value chain. The new rules prohibit them from providing financing and insurance services to develop new or existing facilities for the extraction of fossil energy sources.
Moreover, according to the initiative, financial institutions should develop and implement transition plans, disclosing strategies and mid-term goals to align their business activities to international climate and biodiversity standards.
A new supervisory authority, dubbed Eco-FINMA from the name of the Swiss Financial Market Supervisory Authority, will be established to enforce the requirements through “discretionary and sanctioning powers”, the text added.
The initiative has cross-party support from the social democrats (SP), the Greens, the Green Liberal Party (GLP), the Evangelical People’s Party (EVP), The Centre (Die Mitte), and the liberal party (FDP).
The Swiss parliament will detail the terms to implement the new rules within three years after approval of the text by the public. If the regulations to implement the rules do not come into force within this time, the government is responsible for implementing the rules through an ordinance.
Stefan Müller-Altermatt, member of parliament for Die Mitte party, said: “The public and the companies are committed to sustainability in Switzerland, and at the same time the [Swiss] financial centre is driving climate change and biodiversity loss abroad. We have to change that.”
Michaël Malquarti, chief risk officer at fund manager firm Quaero Capital, added: “I support this initiative as it sets a clear environmental goal for the financial sector, while giving those involved the freedom to explore the best solutions to achieve this goal.”
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