Spotlight on Switzerland

Posted on August, 30 2023

As an Alpine country, Switzerland is particularly affected by climate change: temperatures rise twice as fast as the worldwide average. Since the 1960s, each decade has been warmer than the last and the Alpine glaciers have lost over 60 percent of their volume since 1850 (MeteoSwiss 2022).

The reality of climate change and nature loss


Swiss Climate Change Scenarios show that if greenhouse gas emissions continue to rise, the average annual temperature could increase by 2 to 3°C in 2050, compared to 1980-2010, leading to more extreme weather with hotter days, heavier precipitation, drier summers, and winters with little snow.

The country's biodiversity is also under pressure with a third of all species and half of all habitat types under threat.  Despite preservation efforts, biodiversity remains in a poor state and continues to decline, caused mainly by a lack of protected land area, soil sealing, fragmentation, intensive land use, and nitrogen and pesticide inputs. A report by the Swiss Academy of Sciences (SCNAT), identifies more than 160 subsidies that harm biodiversity, as such exacerbating this negative trend.

If no ambitious conservation measures are taken to halt biodiversity decline and mitigate climate change before 2050, the loss of services that nature provides would exceed CHF 14 billion losses per year, according to a recent study published in 2022 on the state of the environment in Switzerland by the Swiss Federal Council. One alternative for Switzerland could be to designate 30 percent of the country’s land area as priority area for biodiversity conservation. Today, only 15 percent of Switzerland’s area is currently designated as such (SCNAT, 2022).


From commitment …


On a global level, as a Member of the United Nations Framework Convention on Climate Change (UNFCCC) and the Convention on Biological Diversity (CBD), Switzerland has ratified the most important international environmental agreements, committing to the Paris Agreement and the Montreal-Kunming Global Biodiversity Framework. Over the last years, in alignment with these commitments and to protect its natural resources, the country has developed new strategies and instruments for implementation. In 2012, the Swiss Biodiversity Strategy was adopted followed, in 2017, by the Biodiversity Strategy Action Plan. In 2021, the Swiss Federal Council adopted the Long-Term Climate Strategy, setting guidelines for achieving climate neutrality by 2050.[1]

However, in order to achieve its commitments, more needs to be done!

Central banks and financial supervisors who secure a stable financial system play an important role in addressing the risks stemming from climate change and nature loss. When it comes to regulating related financial risks and to protect investors, action undertaken so far has mainly focused on climate change. The Swiss Financial Market Supervisory Authority (FINMA) for example, requires large banks and insurance companies to inform the public about their material climate-related financial risks[2], and expects supervised institutions to manage material climate risks as part of their risk management framework[3].

Despite the steps taken to integrate climate considerations in financial regulation, there are still significant gaps that need to be addressed for Swiss financial institutions to effectively integrate climate change and nature loss as part of their strategies and action plans. Central banks and supervisors need to play an active role in protecting against the future financial risks and instability posed by this twin crisis, and act in a precautionary way to manage such risks in order to support a just transition to a nature-positive, net-zero economy. WWF considers that monetary policy and financial regulation instruments can contribute to mitigate these risks and ensure an orderly transition.


To undertaking action…


WWF´s Greening Financial Regulation Initiative engaged with FINMA to explore opportunities to incorporate climate change and biodiversity loss risk considerations in the financial system. For example, WWF supported FINMA’s ongoing work on sustainable finance with workshop sessions for key FINMA staff on biodiversity related financial risks. The workshops explored the intrinsic link between biodiversity for the Swiss economy and financial system, the main drivers of biodiversity loss, and the role of financial supervisors in addressing those risks. Specific attention was given to the WWF Biodiversity Risk Filter, a corporate and portfolio-level screening tool to help companies and investors prioritize action to address biodiversity risks, which was presented, tested and discussed during the workshop.


What is next?


Building on the WWF-FINMA workshop sessions, WWF will further exchange with FINMA about specific topics such as the extent of financial risks related to biodiversity loss and climate change and their consideration in financial regulation  and supervision, with the overall aim to contribute to the sustainable development of the Swiss financial  center. 

For more information, contact: gfr@wwf.ch
 
[1] For more information on the current state of climate and environmental policy in Switzerland, revise the publication by Siegwart et al. (2022).
[2] Source: https://www.finma.ch/en/news/2021/05/20210531-mm-transparenzpflichten-zu-klimarisiken/
Swiss Alps
© Imago.de