Digital library on sustainable finance
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The Swiss financial sector is in a period of transition toward more sustainable practices, in which banks can be pivotal contributors. In order to be successful, banks must leverage their services, asset management and private clients toward sustainability. Within this study, the Ticino Banking Association chronicles these developments and evaluates sustainable finance initiatives being undertaken in order to encourage sector specific action, demonstrate best practice within the Ticino financial market and interrogate CSR practices. SSF acted as partner for this study.
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This Net-Zero Asset Owner Alliance position paper presents the basis for scaling carbon dioxide removal (CDR) solutions, including a mix of land-based carbon sinks, nature-based solutions and technological carbon removal approaches, which are essential for alignment to a 1.5°C pathway.
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In this report by ShareAction, the often ignores ESG aspect of health is examined through the lens of it being a systemic risk that investors cannot simply diversify away from. Investors driving positive health outcomes are examined alongside existing barriers and future opportunities.
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Health: An Untapped Asset - How Investors can strengthen returns by improving health outcomes - EN
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This study investigates the link between investor’s willingness to pay (WTP) for sustainable investments and the extent of the impact of such investments. The authors conclude that investors do favour sustainable investment mainly due to the so- called “warm glow” derived from buying such investments, but do not necessarily value the degree of positive impact when comparing different investments. This means that investors value that an investment is sustainable compared to unsustainable, but the extent of sustainability depends more on the investment choices presented rather than any intrinsic quality of the investment. Investor decision can therefore be influenced by the “arbitrary choice set up”, namely the comparison to the other investments alongside which one sustainable investment is presented. The biggest influence on the investment choice made was therefore how the investment is perceived compared to other options, rather than anything else. This effect is termed “scope neglect”, which means that other potentially influencing aspects, i.e. the definition of the scope of the investment, is ignored. Investors value whether or not an investment contributes to climate change mitigation, but not necessarily, to what extent it contributes to it. The authors of the study indicated that greenwashing within the financial industry is made possible by these concepts of “warm glow” and “scope neglect”. The responsibility to communicate authentically therefore lies with those financial players who create the choice set up for investors.
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In this publication investment and financing that is required to meet Switzerland's 2050 goals is evaluated. Investments totaling CHF 387 billion will be required by 2050. This means an average annual investment requirement of CHF 12.9 billion. According to this report, it is feasible that most of the necessary investment comes from lending and the capital market. Banks will gain a new business opportunity in financing, but also face logistical challenges considering the diversity of such loans. Capital market financing will account for a small proportion of total annual bond issues. Investments related to public goods can also be additionally supported by state subsidies. A small fraction of investment is also needed from blended finance or public-private partnerships directed towards news technologies, such as carbon sequestration.
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Sustainable finance Investment and financing needed for Switzerland to reach net zero by 2050 - DE
Sustainable finance Investment and financing needed for Switzerland to reach net zero by 2050 - FR
Sustainable finance Investment and financing needed for Switzerland to reach net zero by 2050 - EN
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The European Central bank, in a joint analysis with the European Systemic Risk Board (ESRB), examined climate risk to financial stability using three climate scenarios laid out by the Network for Greening the Financial System (NGFS). The analysis covered all financial sectors within EU regions. Both transition risks and physical risks were investigated and potential gaps in the models were also exposed.
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Climate-related risk and financial stability- ECB/ESRB Project Team on climate risk monitoring - EN
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The new sustainable finance strategy aims to support the financing of the transition to a sustainable economy by proposing action in four number of areas: transition finance, inclusiveness, resilience and contribution of the financial system and global ambition.
It builds on the 2018 action plan on financing sustainable growth, the transition finance report by the Platform on Sustainable Finance and a consultation held from April to July 2020.
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Strategy for Financing the Transition to a Sustainable Economy - EN
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This report highlights the urgency for central banks and financial supervisors to act on the risk of unprecedented nature loss. With biodiversity loss not only compounding climate-related risks but a global crisis in its own right, the report warns that current practices of only integrating climate-related risks and impacts in existing mandates of central banks and financial supervisors, and not including risks from nature loss, fall short in ensuring a sustainable financial system
The report was published within the scope of WWF’s Greening Financial Regulation Initiative which supports central banks, financial regulators and supervisors in enhancing the financial sector’s stability and resilience to climate-related and broader environmental and social risks, while enabling the mobilisation of capital for the transition to a low-carbon, resilient and sustainable economy.
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Nature’s next stewards. Why central bankers need to take action on biodiversity risk - EN
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The 2021 State of Cities Climate Finance Report investigates the current state of urban climate investment, the barriers to reaching the needed investment levels, and the steps
to overcoming these challenges. The report is delivered in two parts; The Landscape of Urban Climate Finance (Part 1). Authored by the Cities Climate Finance Leadership Alliance Secretariat (Climate Policy Initiative) in partnership with the Atlantic Council’s Adrienne Arsht-Rockefeller Foundation Resilience Center, This section comprises a comprehensive global estimate of urban climate finance, tracking all sources of climate finance flows and investments in buildings and the transport sector. In Part 2, The Enabling Conditions for Urban Climate Finance, authored by the World Bank, enabling frameworks are analyszed and potential solutions for mobilizing climate finance for low carbon, climate-resilient urban development pathways are highlighted.
The Cities Climate Finance Leadership Alliance is a multi-level and multi-stakeholder coalition aimed at closing the investment gap for urban subnational climate projects and infrastructure.
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The Convention on Biological Diversity (CBD) is an international legally binding treaty signed in 1992 to provide a global framework for action on biodiversity. It is one of the three Rio Conventions, alongside the UN Framework Convention on Climate Change (UNFCCC) and UN Convention to Combat Desertification (UNCCD). It aims to conserve biological diversity, sustainably use components of biodiveristy and share benefits from genetic resources dair and equitably.
The Post-2020 Global Biodiversity Framework aims to mobilize the world community to protect and restore nature and support governance at all levels, thereby unlocking new business opportunties and conserving biodiversity for the benefit of future generations.
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Financial Sector Guide for the Convention on Biological Diversity. Key Actions for Nature - EN
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The transition to a low carbon economy has potential risks to the financial sector, the so called "carbon bubble". Companies relying too heavily on fossil fuels are incorrectly valued on the stock market, because these valuations fail to consider the full cost associated with climate change and climate aligned policies. This study (1) assesses the carbon risks in the German economy, (2) conducts a carbon stress test for German financial institutions and (3) recommends regulatory instruments to mitigate carbon risks internationally.
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Final Report: Carbon Bubble - Analyses, economic risks, measures and instruments - EN
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Institutional asset owners globally are increasingly including social and environmental considerations into their portfolios and investment strategies. In addition to growing client expectation, regulatory pressures and the reality of the effects of climate change are also increasing.
This policy brief identifies key challenges that institutional asset owners face when setting impact priorities and realised strategies for overcoming such difficulties, investigates both top-down and bottom-up approaches to setting targets, and offers routine steps for investors to define their social and environmental priorities within their investment process. Significant opportunities exists for using asset owner portfolios as leading tools that serve their stakeholders, the planet and society at large.
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Institutional Asset Owners: Approaches to Setting Social and Environmental Goals - EN
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Measuring financed emissions is crucial in providing an understanding of climate-related transition risks to a portfolio. It also helps FIs to set an emissions baseline, develop science-based targets, act to reduce their portfolio climate impact, and disclose progress. This framework examines the necessary measures that can help the financial sector become Paris-aligned.
The Partnership for Carbon Accounting Financials (PCAF) is an industry-led initiative which enables financial institutions to consistently measure and disclose the absolute greenhouse gas (GHG) emissions associated with their loan and investment portfolios through GHG accounting.
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This impact report aims to measure the extent to which the Loans for Growth (LFG) fund meets its objectives to foster job creation, employment and entrepreneurship in emerging and frontier markets through small and medium enterprise (SME) finance. The LFG fund, launched in September 2016 and closed in September 2020, provided financing to SMEs by investing in local, specialized financial institutions. Over four years, the fund invested in 42 financial institutions across 24 countries
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This is the final report in a series of four annual impact reports that follow a sample of enterprises financed by the LFG fund. The presented outcomes are based on surveys with 924 SMEs in 12 low and middle income countries between 2017 and 2020. Due to the global covid pandemic in 2020, many SMEs suffered losses, however over the course of the four years of investment there was a clear positive trend in outcomes: asset size, proportion of women employed and average wage rates.
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Many institutional investors have pledged to align their portfolios with decarbonisation trajectories aiming for net-zero greenhouse gas emissions by 2050, and this objective is being translated into engagements on the alignment of their portfolio as part of the net-zero investment framework. To tackle the limitations of traditional climate benchmarks, which are the fruit of a mix-up between climate and financial considerations, Scientific Beta has constructed the Climate Impact Consistent Indicies (or CIC indicies).
This paper presents the principles of Net-Zero investment frameworks, the bottom-up CIC Indices construction methodology that ensures consistency between the stock-level decisions and the overall climate impact goals. Further the climate-related and financial characteristics of the indices are evaluated.
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As part of a joint programme on "A Legal Framework for Impact", the PRI, UNEP FI and The Generation Foundation commissioned a legal analysis to determine the extent to which legal frameworks enable investors to consider impact in their activities across 11 jurisdictions: the EU, Australia, Brazil, Canada, China, France, Japan, South Africa, the Netherlands, UK and the US.
The report, authored by Freshfields Bruckhaus Deringer, found that while there are differences across jurisdictions and investor groups, where investing for sustainability impact approaches can be effective in achieving an investor’s financial goals, the investor will likely be required to consider using them and act accordingly.
It also provides an extensive suite of options for policymakers wishing to facilitate investing for sustainability impact, including changing investors’ legal duties and discretions, such as allowing the pursuit of sustainability goals as long as financial return goals are prioritised, and a presumption in favour of investor collaboration in tackling sustainability challenges.
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A Legal Framework for Impact: Sustainability impact in investor decision-making - EN
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The Global Sustainable Investment Alliance (GSIA) is an international collaboration of membership-based sustainable investment organisations around the world, with the mission is to deepen the impact and visibility of sustainable investment organisations at the global level. The 2020 Global Sustainable Investment Review (GSIR) is the fifth in a series of biennial reports. It maps the state of sustainable and responsible investment of major financial markets globally, reporting on data as at the beginning of 2020. The report shows the continuing prevalence of sustainable investment across the global investment industry, with assets under management reaching USD35.3 trillion, a growth of 15% in two years, and in total equating to 36% of all professionally managed assets across regions covered in this report.
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For the fourth consecutive year, SSF published its comprehensive market study shedding light on sustainable investment developments in Switzerland. In 2020, the sustainable investment volumes reported by banks and asset managers and internally managed asset owner increased by 31% to CHF 1,520.2 billion.
In addition, the market study chronicles regulatory developments that marked the sphere of sustainable finance and also features two interviews with government representatives and academia.
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Swiss Sustainable Finance Market Study 2021 - DE
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On behalf of Greenpeace, INFRAS and Inrate analysed 51 sustainability funds licensed in Switzerland and Luxembourg to examine whether sustainable investments have a positive capital allocation effect. The results showed that so far, these investments hardly succeeded in steering significantly more capital towards a sustainable economy than conventional funds.
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This report by the International Capital Markets Association (ICMA) provides an international overview of both official and market-based taxonomies.The aim is to further understanding for market players of what these various taxonomies entail and what commonalities and differences exist between definitions.
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Overview and Recommendations for Sustainable Finance Taxonomies - EN
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This report seeks to understand how deeply climate-related expertise is embedded within private equity firms and to explore what climate performance expectations they impose on the companies in which they invest.
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This report sets out concrete reporting recommendations for the ESG performance of assets, for both asset owners and asset managers. Relevant report items, both on a qualitative and quantitative level, are displayed with the aim of allowing investors to judge the ESG performance of assets and, where necessary, aggregate this for numerous portfolios.
The recommendations include aspects on both the issuing entity level, as well as on the portfolio asset level. As market participants are not all equally advanced in ESG integration and reporting, proposals are formulated on two levels: Foundational-level reporting for beginners, and Advanced-level reporting for more experienced investors.
The SSF Reporting Recommendations on Portfolio ESG Transparency are a starting point on the path to more sustainability transparency and credibility of Swiss investors. They will have to be tested by different investors and developed further, based on feedback.
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SSF Reporting Recommendations on Portfolio ESG Transparency - DE
SSF Reporting Recommendations on Portfolio ESG Transparency - FR
SSF Reporting Recommendations on Portfolio ESG Transparency - EN
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Improved measurement and modelling of the impacts of climate change on financial stability is needed to underpin a policy debate that is gaining momentum. This report deepens quantitative insights for the European Union, adding to a growing body of international research examining the impacts of climate change on financial stability. In particular, it seeks to fill key gaps in the empirical understanding of the impacts of climate-related risk drivers on financial stability.
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This publication sets out different actions for investors invested in real assets and seeking to implement the recommendations of the Task Force on Climate-related Financial Disclosures (TCFD). More specifically, it includes technical guidance on the actions for asset owners; example of peer asset owner practice on implementing the TCFD recommendations and reducing exposure to climate risk; questions to engage consultants or fund managers on TCFD and climate scenarios.
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In the context of the new CO2-law in Switzerland this paper examines climate risks for Swiss pension schemes, the consequences and potential solutions. The identified risks to pension schemes are reputational risks, regulatory risks, disruptive technology, “stranded assets”, and physical climate risks.
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Ethos Opinion Paper: Klimawandel: Die Renten der zweiten Säule sind gefährdet - DE
Ethos Opinion Paper: Klimawandel: Die Renten der zweiten Säule sind gefährdet - FR
