In the Paris Agreement, the international community committed to making finance flows climate-compatible or “consistent with a low greenhouse gas emissions and climate-resilient pathway”. The intention is for the signatories to achieve the Agreement’s goal through voluntary action. Since Switzerland is a signatory, the federal government is providing methodologies and tools and making itself available for dialog. The Federal Office for the Environment (FOEN), in close cooperation with the State Secretariat for International Finance (SIF), introduced a climate compatibility test for financial market participants in 2017.
The 2020 test was being conducted on a voluntary, anonymous basis and is open to asset managers for the first time. It was free of charge. The Federal Administration will only receive and report on aggregated, anonymized data. Regular climate compatibility tests allow the government to gauge the progress made toward climate-compatible finance flows using voluntary measures and determine whether additional options need to be considered. The FOEN was invited to take part in the test via, among others, the associations of the financial sector and the FOEN. The test is also suitable for asset managers that offer real estate products in Switzerland.
For the first time, the entire Swiss financial market has voluntarily undergone climate compatibility testing on the initiative of the Federal Office for the Environment FOEN and in cooperation with the State Secretariat for International Financial Matters SIF. A representative number of Swiss pension funds, insurance companies, banks and asset management companies have voluntarily participated in the PACTA 2020 test. A total of 179 financial institutions took part, including banks and asset managers for the first time. The results of the representative test create transparency and support the efforts of financial institutions to steer their investments in a climate-friendly direction. They also show initial progress, but still fall short of the target if the Swiss financial centre is to play a leading role in the area of sustainable financial flows. It continues to invest too heavily in oil and coal production. Pension funds can make an important contribution to the climate targets if they implement their planned building renovations.