Switzerland refrains from state greenwashing laws | News

The Swiss government (Federal Council) is holding off on introducing state regulations to combat greenwashing, the European Union is paving the way to reform the Sustainable Finance Disclosure Regulation (SFDR), and the banking and asset management industry is unveiling its own self-regulatory framework .

The cabinet said yesterday that “at this point” state-sponsored greenwashing regulations will not be introduced, given the EU’s ongoing work on the SFDR amendment and the high importance of the European market for the Swiss financial center.

However, it instructed the Ministry of Finance to reassess the possibility of fully implementing the Federal Council’s position on preventing an “eco-economy” in the financial sector, published in December 2022, after the EU publishes possible changes to the SFDR and by the end of 2020. At the latest in 2027, he added in the note.

This week, the European Supervisory Authorities (ESAs) published a common position highlighting changes aimed at reducing the complexity of the SFDR framework by introducing two product categories – ‘sustainable’ and ‘transitional’.

To reduce the risk of eco-shaming, category rules should have a clear purpose and products offered outside both categories should be “appropriately disclosed”, the European Supervisory Authorities said.

Switzerland leaves the banking, asset management and pensions sectors to define their own rules, representing a less intrusive state approach to sustainable investment and eco-shaming.

At the end of April, the Swiss Asset Management Association (AMAS) reviewed self-regulation on transparency and disclosure of information on collective assets related to sustainability in order to prevent “eco-dark” money laundering.

Yesterday, the Federal Council gave the green light to new self-regulatory rules that will soon enter into force, with a transitional period for implementation until January 1, 2027, she said.

According to the government, the new self-regulatory rules implement various aspects of the Federal Council’s position on greenwashing, including the definition of sustainable investment objectives, a description of the sustainability approaches used, accountability and audits by an independent third party.

Issues remain unresolved regarding the implementation of self-regulatory provisions in the application of EU law and the reference framework for the Sustainable Development Goals and the possibility of their enforcement, she added.

AMAS, the Swiss Bankers’ Association and the Swiss Insurance Association, which have also developed their own self-regulations on ESG and greenwashing, welcomed the Federal Council’s decision.

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