“Who killed the ESG party?”, the Financial Times recently asked. After years of significant growth, the number of new sustainability fund launches has plummeted globally. In the last two quarters, existing products witnessed net asset outflows in all regions of the world except in Europe (where net new money, however, considerably slowed).

Among many reasons, the accumulating shakes to the global geopolitical order, exacerbated by the return of war on European soil, have shifted investors’ priorities to what feels to be more immediate and pressing concerns. Ecological risks may appear as a deferred, obscure danger, distant in space and time, subject of a suspicion rather than a certainty.

But does climate risk not already impact the real economy? Extreme weather events, for example, increasingly disrupt agricultural production, energy grids, supply chains, etc. and contribute to feeding price inflation. Industrial facilities turn out to be vulnerable to flooding or wildfire, what leads to production interruptions and drives insurance premiums up and real estate valuation down. The upcoming impact on investment returns and asset values, on the financial reliability of investee companies and on the solvency of borrowers are of direct relevance to the Swiss financial sector.

The massive market value destruction and social harm induced by the 2008 Financial Crisis taught us the inherent faultiness of short-term thinking. A few scandals leading to company collapses in the last couple of years showed us that good governance is not a buzzword, but a primary condition to the reliability of invested assets’ valuation.

Let’s continue building on these valuable lessons. We are presented with this unique opportunity that the right thing to do is also what makes economic sense. Now more than ever is the right time to focus on the underlying forces that determine lasting value, facilitating the transition to a sustainable and prosperous Swiss economy on the long term.

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Swiss News

• In June 2024, AMAS, SBA and SIA published their updated or new self-regulations to address Greenwashing. The AMAS self-regulation on transparency and disclosure for sustainability-related collective assets and the SBA Guidelines for the financial service providers on the integration of ESG-preferences and ESG-risks and the prevention of greenwashing in investment advice and portfolio management will enter into force on 1 September 2024, while the SIA self-regulation for the prevention of greenwashing with unit-linked life insurance policies with reference to sustainability enters into force on 1 January 2025.

• Federal Council grants mandate for the International Biodiversity Conference: It approved the mandate for the Swiss delegation to the 16th World Biodiversity Conference (CBD COP16) and the Nagoya and Cartagena Protocols. The meeting, which begins in mid-October, will focus on implementing the new global biodiversity framework from Kunming-Montreal. 

International News

• A Stocktake on Nature-related Risks has been published by the Financial Stability Board, summarizing current and planned regulatory and supervisory initiatives, and presenting the key challenges for authorities in identifying, assessing and managing nature-related financial risks.

• The United Nations Development Programme (UNDP), Global Reporting Initiative (GRI), GSG Impact, IFRS Foundation, and International Organization for Standardization (ISO) have forged an alliance to support the adoption of international standards that improve company’s sustainability disclosures around the world.

• The International Finance Corporation (IFC) and the IFRS Foundation announced a partnership to enhance sustainability reporting in emerging markets and developing economies (EMDEs). The partnership will focus on implementing programmes to promote and build capacity for the consistent application of the IFRS Sustainability Disclosure Standards across EMDEs.

Market News

• As part of a review of he Corporate Net-Zero Standard, the Science Based Targets initiative (SBTi) has published a scope 3 discussion paper, evidence on the effectiveness of environmental attribute certificates, a report on the effectiveness of carbon credits and an overview of the effectiveness of carbon credits in corporate climate targets.

• A new tool that can be used to test the assumptions around short-term climate outcomes has been released by the UN Environment Programme Finance Initiative. The excel-based visualization tool aims to allow the exploration of some macroeconomic, transition and physical risks shocks and various combinations thereof.

• ENCORE has launched a major tool-upgrade for screening risks to natural capital. The new enhancements are underpinned by the latest scientific research and driven by feedback from ENCORE users. Read more about the improvements here.

• An updated version of the Nature Target Setting Framework for Asset Managers and Asset Owners was also published by the Finance for Biodiversity Foundation. The update includes three types of nature targets, guidance on identification of impact drivers, target setting and further guidance and support.

• The Financial Times has published a film asking "Who killed the ESG Party?" Until recently, the party was in full swing, the marketing material was everywhere and the money was rolling in. But after poor performance, greenwashing scandals and a political backlash in the US, asset managers have become quieter about their ESG credentials.

We are happy to welcome the following organisation as a new SSF member: 

• PeaceInvest (Service Provider)

The full list of our members and network partners, now standing at 254, can be found here.  

• ETH Zurich is offering a four-day course on Climate Change Risk Modeling, Innovation and Sustainable Finance from 12 September to 4 October. The program covers the interconnectedness of the economy, society, and the environment, focusing on measuring and disclosing nature-related risks and opportunities. It also explores regulatory standards, greening financial sector frameworks, and technology-driven innovations that support a sustainable future transition.

• 5 September, SSF/SFI: ESG Financing for SMEs and Real Estate: Addressing Risk While Creating Value, Zurich
• 16/17 September 2024, New Energy Investor Summit, Zurich
• 2 & 23 October, SSF/Global Canopy Deforestation Workshop, SSF members-only, email us for further information
• Save the date: 3 October 2024, 10:00-11:30 AM, for the SSF Webinar on the Impact of EU Sustainable Finance Regulations on Third Country Companies, featuring guest speakers from Eurosif and the industry. Register here.

• 19 July 2024, Ein Akronym gerät aus der Mode: UBS lanciert kaum noch neue ESG-Fonds, Tippingpoint
• 8 July 2024, Wachsender Markt für nachhaltige Investitionen in der Schweiz, Absolut Research
• 8 July 2024, «Ich betrachte soziale und ethische Themen aus finanzieller Perspektive», Handelszeitung (Portrait «Women in Finance» of SSF CEO, Sabine Döbeli)
• 1 July 2024, Durabilité: les banques au défi de la cohérence, Le Temps

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