A ‘sustainable financial centre’: key questions and answers

Nowadays, when people talk about a ‘sustainable financial centre’, they mean that the financial sector should support economic and social development that conserves resources and is sustainable in the long term. This describes a financial centre that uses capital, financing and risk protection in such a way that environmental, social and economic objectives work in concert.

The key here is not to confine sustainability to climate issues. For the SIA, sustainability means thinking about economic, environmental and social aspects in a holistic way. Economic performance, environmental responsibility and social cohesion are not mutually exclusive – they are dependent on one another.

The Swiss financial centre is well aware of this. It supports the transformation of the economy, facilitates investments and helps to hedge against risks. Insurers have a key role to play here – not only as institutional investors, but also as bearers and managers of risks.

Innovation is the most effective driver of sustainable progress. New technologies help reduce CO₂ emissions, improve resource efficiency and roll out climate-friendly solutions rapidly across the globe. The decisive factor here is that meaningful change can only be achieved if the financial sector and the real economy take responsibility together. After all, innovative ideas only have an impact when they can be financed, scaled up and adopted across the board. This is precisely where the financial sector plays an important role – as a facilitator of transformation. 

The insurance industry therefore advocates a regulatory framework that promotes innovation rather than hinders it. In the view of the SIA, a sustainable financial centre is characterised by transparency, entrepreneurial freedom and reliable, innovation-friendly rules. 

Sustainability does not come from bureaucracy or red tape, but from incentives: for entrepreneurial risk-taking, for investments in new technologies and for clear, workable standards. Regulatory approaches that primarily create administrative hurdles and bureaucracy without making an effective contribution to sustainable development should be avoided. The focus should be on self-regulation wherever possible.

The key lies in solutions built on partnership – not restrictions.

Insurers have a dual role to play when it comes to sustainability; they are bearers and managers of risks, but they are also long-term investors. Both roles enable them to help shape the transformation of the economy – by highlighting risks, providing incentives for greater resilience and supplying capital for innovation and thus for transformation.

The insurance industry favours support over blanket bans, although these can be used as a tool in individual cases. As a rule, it is more effective to actively support companies during their transformation. After all, transformation is a gradual process and requires stable framework conditions.

In practical terms, this is achieved through various means: in a company’s own business operations, in investment activities and in underwriting. For the latter, insurers can assess risks, formulate expectations and provide incentives for improvement. In this way, they help companies become more resilient and sustainable. Through their portfolios, insurers can both prioritise low-emission investments (making the corresponding carbon footprint transparent using the Swiss Climate Scores) and facilitate sustainable investments. In doing so, they remain accountable to their group of policyholders and must ensure adequate investment returns.

It should be noted that insurers can support change, but they cannot prescribe or enforce it.

Their role is to hedge against risks, facilitate innovation and help fund transformation. The primary focus of these efforts is always to support the real economy during this period of change as a partner.

Sustainability and the associated risks are highlighted in various ways in the financial centre. Sustainability reporting plays an important role here. This has become much more professional among insurers in recent years; for example, according to a study conducted by the Institute of Insurance Economics (IVW-HSG), the frameworks and standards used are becoming increasingly consolidated. Tools such as the Swiss Climate Scores also help to make climate-related information on investments more transparent and comparable.

At the same time, recording, evaluating and measuring risks is insurers’ core business. In Switzerland, the Swiss Solvency Test (SST) assesses whether insurers are well equipped to bear these risks. The SST is a modern, principle- and risk-based assessment tool used to evaluate the capitalisation of insurance companies. It covers all material risks on both the assets and liabilities sides. Climate-related financial risks or, in a broader sense, those related to nature, do not constitute a separate risk class. Instead, they are part of the many risk drivers that are included in the overall assessment. 

The FINMA Circular on nature-related financial risks defines the supervisory expectations with regard to a selected risk driver. It also sets out requirements for how climate- and nature-related risks can be appropriately integrated into existing governance and risk management processes. In the opinion of the SIA, however, this level of supervision goes far beyond international standards and regulations.

‘Nature-related financial risks’ refer to financial risks that may arise from climate change and other changes in natural conditions. As a rule, these include not only climate-related risks, but also other risks associated with nature and ecosystems.

The broad definition of ‘nature’ opens up a wide range of potential risks. This is understandable given the complexity of the issue, but it makes it difficult to implement measures in a pragmatic and proportionate way. Research into the impact of biodiversity and the environment on financial risks is still in its infancy, and the complex interrelationships have not been sufficiently examined. There is not enough data to determine the impact of risk drivers with regard to other nature-related financial risks with any certainty; or rather, specific historical time series are available in a less easily comparable form than for climate data.

At the international level, the focus is therefore on climate risks as well. This seems appropriate from a risk perspective, as climate change is expected to be the biggest risk driver from the middle of the century onwards.

Prudential risk management requirements should be limited to material financial risks in order to ensure effective allocation of resources. Even with a view to the principle of materiality, focusing on climate-related risks currently seems to be the right approach. The SIA is advocating for this in the regulatory debate.

When it comes to sustainability, the Swiss financial centre is already characterised by a comprehensive set of regulations. Switzerland’s climate targets are enshrined in law and explicitly include the flow of financial resources. There are also enhanced transparency and reporting obligations for larger companies, banks and insurers, as well as increasing supervisory requirements in terms of governance, risk management and scenario analysis. This framework is supplemented by guidelines and self-regulatory measures designed to prevent greenwashing.

From the SIA’s point of view, one thing is clear: there is no shortage of rules. Additional requirements must therefore be carefully examined to determine whether they actually have more impact – or whether they mainly tie up resources and increase administrative hurdles. It is crucial that sustainable business practices are effectively supported without putting the brakes on innovation, investment and concrete measures through unnecessary bureaucracy.

The SIA is committed to sustainable development and Switzerland’s climate targets. It supports the federal government’s strategy to achieve net zero by 2050 and the goals of the Paris Climate Agreement. The SIA takes a clear but nuanced approach in this regard, namely that sustainability must be promoted effectively – by means of innovation, responsibility and practical solutions rather than token gestures. 

From the SIA’s perspective, economic, environmental and social aspects must be considered in holistic terms. Sustainability cannot be reduced to mere buzzwords or to a logic based solely on prohibition. The important aspect is that measures actually have an impact and enable sustainable development in the long term.

In this regard, the SIA advocates for a framework that promotes innovation rather than primarily creates administrative hurdles. In the view of the industry association, sustainability will be strengthened wherever entrepreneurial freedom is maintained and tangible improvements are the focus.

The SIA is also dedicated to achieving this on an intentional level. Through its commitment to the Principles for Sustainable Insurance, the association helps its members to systematically incorporate sustainability considerations into their risk management processes and the development of their business activities.

Antitrust law remains a key guiding principle for the SIA. Investment and subscription policies are the responsibility of individual companies; uniform guidelines at association level would not be appropriate and would be highly problematic in terms of competition law.

The SIA takes a critical view of the new Responsible Business Initiative (RBI). That said, the insurance industry is not opposed to the evolution of Swiss sustainability regulations. In view of the ongoing adjustments to EU rules, however, it makes little sense for Switzerland to align itself closely with a set of rules that is already being simplified in Europe itself. From the SIA’s perspective, therefore, there is no need for unilateral regulatory action; instead, the focus should be on further development that is compatible with international standards, without the ‘Swiss finish’.

Accordingly, the SIA also takes a critical view of the Federal Council’s counter-proposal, for which the consultation period began on 1 April 2026 and which aims to introduce a new Federal Act on Sustainable Corporate Governance (CSA).

In some respects, such as liability, supervision and reporting, the current draft exceeds the EU Omnibus standard and extends far beyond an internationally coordinated modernisation of sustainability regulations in general. The draft effectively constitutes implementing legislation for the new RBI. As such, it places a disproportionately heavy burden on the Swiss economy in a tense geopolitical and economic situation.

In addition, the Federal Council is missing an opportunity to align the current ‘Swiss finish’ provisions in the Swiss Code of Obligations (due diligence requirements regarding child labour and conflict minerals) with comprehensive due diligence requirements, thereby simplifying them. Furthermore, the Federal Council is focusing exclusively on those provisions of the EU Omnibus standard that are detrimental to the economy; the concessions and deregulation measures included in the standard are being ignored.

The SIA takes a highly critical view of the financial centre initiative because it is pursuing an important issue using the wrong means. Instead of effective incentives and market-based instruments, it relies on bans, additional supervision and more red tape. From the SIA’s perspective, it is crucial that climate protection starts where emissions actually occur. Impact is more important than management.

In addition, the initiative has the potential to make Switzerland somewhat of an outlier on the world stage. If Swiss financial and insurance providers were no longer allowed to conduct certain transactions due to government regulations, this would not eliminate global demand for financing and hedging. Instead, there is a risk that businesses will be relocated abroad – without comparable standards and without any additional benefits for the environment or biodiversity.

In the SIA’s view, the initiative would also largely overlap with existing requirements without providing any additional benefit as a result. At the same time, key issues regarding implementation would still be unclear. This would create legal uncertainty, increase administrative overheads and incur additional costs.