Bridging the Gap: Measuring progress on the climate goal alignment & climate actions of swiss financial institutions

This broad, comparable analysis covering all major Swiss financial market participants shows progress on alignment with climate goals, but major gaps remain. Switzerland is the first of several major European financial centers – including France, Austria, Sweden, and Norway – set to measure progress on finance-related climate goals in the run-up to COP26.

The report is based on a climate compatibility assessment of 179 Swiss financial institutions representing around 80% of the market, more than double the number of institutions that participated in the 2017 pilot study. A new module for Swiss real estate and mortgage portfolios also enabled the assessment of three-quarters of all Swiss residential properties.

Key findings

The study assessed the alignment of the Swiss financial sector with climate benchmarks, using 2DII’s Paris Agreement Capital Transition Assessment (PACTA) methodology. For the first time, 2DII and its partners were able to measure progress across a vast swathe of the financial sector over the past three years, shedding light on the distinction between portfolio reallocation and real-world emissions reductions.

Critically, the assessment showed that the Swiss financial sector’s consideration of climate issues has increased demonstrably since the 2017 study, resulting in:

• Measurable improvement in terms of climate compatibility across a number of key sectors, e.g. investors holding more companies in their portfolios that have increased electric vehicle production and renewable power capacity.
• A strong increase in climate actions, such as shareholder engagement, with over 40% of recorded actions taking place in the past two years. Financial institutions that participated in the 2017 pilot led the way, with more than 50% saying they had taken action based on the results of that assessment. On average, those financial institutions performed better in the PACTA 2020 test than their peers.
• Strong progress in mainstreaming this topic: 69% of participants had defined a climate target or aspiration for at least one asset class; 65% were part of at last one sustainability initiative; and around 20% of portfolios submitted were self-labeled as ESG.