Policy Outlook

The Swiss Federal Council’s stance on greenwashing and sustainable finance

Sustainability and sustainable finance are receiving attention from every angle; in 2022 the private sector made a record number of commitments to sustainability. Both national and international regulators have started to assert control over this space, and sustainability disclosure-related laws and standards are being developed. Despite the International Sustainability Standards Board’s recent definition of sustainability, globally there remains a lack of common understanding about what sustainable operations, products, and services actually are.

Regulators are on the hook to provide clarity to all companies about additional expectations that arise from their claims of “sustainable” products and services. As regulators (especially those that oversee the financial system) work behind the scenes to prepare appropriate anti-greenwashing and sustainability policies, organizations will continue to face challenges. At ECOFACT, we believe these challenges are one of the top ESG issues in Switzerland and around the world.

However, direction from some governments is beginning to materialize — in mid-December 2022, the Swiss Federal Council communicated its position on greenwashing in the financial market, and it approved and published a report on sustainability in the financial sector.

What is the Swiss Federal Council’s position on greenwashing?

Swiss regulators are moving to protect consumers from deceptive, unsubstantiated sustainability claims (i.e. greenwashing). With the publication of Guidance 05/2021, FINMA, the Swiss Financial Market Supervisory Authority, set expectations for transparency around sustainable-fund products. The Swiss Banking Association released ESG-related guidelines in June 2022, and the Asset Management Association Switzerland published sustainability-related self-regulation in September 2022.

After reviewing the country’s regulatory framework to see if it sufficiently addresses greenwashing, the Swiss Federal Council shared its position in relation to the financial market. Just like the EU and several other jurisdictions have done, the Federal Council clarified that financial products can only be labeled as sustainable or as having sustainable features if they:

  • align with one or more specific sustainability goals, or contribute to achieving one or more specific sustainability goals (sustainability goals should be defined “using the widest possible reference framework,” and the paper suggests using the Sustainable Development Goals in the UN’s 2030 Agenda for Sustainable Development); and/or
  • disclose the approach used to classify a product as sustainable and regularly report on the sustainability goals in a public, easily accessible, transparent, and comparable manner.

Next steps

The Federal Council instructed the Federal Department of Finance (FDF) to establish a working group that will determine the most effective way to implement the Federal Council’s position. The FDF is expected to present a plan by September 30, 2023.

What are other countries doing?

The Federal Council’s actions in the greenwashing landscape reflects a global trend that ECOFACT has had on its radar for years — jurisdictions around the world are setting expectations. Consider these recent events:

  • United Kingdom: The UK’s Financial Conduct Authority proposed regulating sustainability claims by investment firms.
  • European Union:
    • The EU Commission provided guidance on how to comply with its sustainability system under the Sustainable Finance Disclosure Regulation. However, many are finding it tricky to interpret the guidance. This led several European asset managers to reclassify the sustainability profile of investment funds from Article 9 (products with a sustainable-investment objective) to the less burdensome Article 8 (products with environmental and/or social characteristics).
    • In addition, the European Securities and Markets Authority is asking stakeholders for input on using ESG- or sustainability-related terms in funds’ names. Feedback can be submitted until February 20, 2023.
    • Moreover, the European supervisory authorities (ESAs) published a call for evidence on greenwashing, looking for input on the key features, drivers, and risks of greenwashing as well as examples of malpractices. The feedback will inform regulatory actions the ESAs recommend to the EU Commission. Feedback could be submitted until January 16, 2023.

Sustainable finance in Switzerland

The Federal Council has issued documents, such as “Sustainability in Switzerland’s financial sector” (June 2020) and “Leading worldwide, rooted in Switzerland” (December 2020), that focus on the role of sustainability in the country’s financial market.

Switzerland aims to consolidate its position as one of the world’s leading locations for sustainable finance by embedding sustainability in one of the three pillars of its financial market strategy. The recently published report on sustainability in the financial sector (December 2022) presents a plan for achieving this goal through measures undertaken between 2022 and 2025. Below, we highlight some of the 15 measures planned:

  • Generate sustainability data from all sectors of the economy:
    • Require large companies to align their reporting with the recommendations of the Task Force on Climate-related Financial Disclosures (Note: through the ordinance on climate disclosures the Federal Council enacted this as law in November 2022);
    • Provide data on the climate compatibility of real estate and mortgages; and
    • Publish a classification system for green fintech applications.
  • Promote transparency in the financial sector:
    • Promote net-zero alliances (Note: the FDF supports the activities of the Glasgow Financial Alliance for Net Zero and is encouraging financial institutions to be transparent about their net-zero commitments);
    • Continue to conduct regular voluntary climate tests with financial institutions; and
    • Ensure the Swiss Climate Scores indicators produce comparable results and provide transparency on financial institutions’ alignment with their climate goals.
  • Promote impact investments and green bonds:
    • Promote financial flows that make climate and sustainability impact in developing countries; and
    • Mainstream impact investment and issue green confederation bonds (Note: in August 2022, the Federal Council adopted a framework for issuing green confederation bonds; Switzerland issued its first green confederation bond in October 2022).
  • Price pollution:
    • Support global carbon-pricing initiatives; and
    • Explore opportunities in carbon offsetting.



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