• Patrick Schmucki, Expert |

Both Swiss and EU requirements in 2023 are focussed around key topics such as transparency, climate risk mangagement or investor protection. Swiss requirements are becoming more numerous and binding in nature. A holistic and coordinated approach is indispensible to manage complexity.

The 3rd installment of our annual sustainable finance regulatory outlook for Switzerland and the EU shows three main tendencies compared to previous years:

  • The focus of the regulators remains on transparency, climate risk management and investor protection (or a combination of the three).
  • The number of binding Swiss requirements is increasing and is starting to take shape as envisioned in the Federal Council’s Sustainable Finance Strategy. While Swiss requirements clearly aim towards the same goal, they are less instrusive than their EU equivalents.
  • The conversion of EU and Swiss regulation will continue in the future, as laid out in the respective report by the Federal Departement of Justice expected for the end of November 2023.

Transparency: it’s getting serious

  • For most large financial institutions the 2023 financial year will be the first year they will need to report under the new non-financial reporting obligations of the Code of Obligations.
  • The Corporate Sustainability Reporting Directive (CSRD) will start applying between 2024 and 2028 to both EU and non-EU firms. A specific disclosure standard for non-EU firms is expected to be released in fall 2023. See our blog and factsheet for an overview of the implications for non-EU firms.
  • The Sustainable Finance Disclosure Regulation (SFDR) regulatory technical standard applies from 1 January 2023, and quantitative PAI (Principle Adverse Impact Indicators) disclosures on entity level will have to be published from 1 June 2023.
  • The EU Taxonomy will expand its scope, with the environmental objectives 3 to 6 (sustainable use and protection of water and marine resources; transition to a circular economy, waste prevention and recycling; pollution prevention and control; and protection of healthy ecosystems) entering into force from 1 January 2023. Read more about how the EU Taxonomy impacts the Swiss financial industry here: Taxonomy Regulation.

Climate risk management: Going beyond climate

  • The mandatory climate risk reporting (TCFD) for large institutions in Switzerland has been postponed to 2024. Financial institutions should make use of 2023 for the preparation work. Read our blog on the impacts we are expecting.
  • The climate will remain on the political agenda, as the popular vote on the counterproposal to the Glacier Initiative will be held either in summer 2023 or fall 2024.
  • The loss of biodiversity and the economic implications of this development is a focus topic for the Federal Countil in its agenda for 2025. Most important in this regard will be the expected publication of the version 1.0 of the Taskforce on nature-related Financial Disclosures framework in September 2023.
  • In the area of climate-related risk management, both the European Central Bank (ECB) and the European Banking Authority (EBA) are expected to release major reports in the first half of 2023, further clarifiyng how these risks are supposed to be quantified and accounted for in the risk management process. 

Investor protection: greenwashing is front and center

  • The SBA Guideline on Integration of ESG Preferences and Risks into the Investment Process enters into force on 1 January 2023. See our blog for more details.
  • The SBA Guideline on ESG and Mortgages also enters into force on 1 January 2023. Our blog highlights the main implications.
  • The AMAS self-regulation on transparency and disclosures for ESG funds is entering into force on 30 September 2023, regulating which funds should be considered sustainable and what regulatory obligations come along with such a qualification.
  • The position paper of the Federal Council for the prevention of greenwashing in the Swiss financial market highlights the planned changes in supervisory law to address greenwashing. Concrete recommendations are expected by September 2023, thus paving the way for further binding requirements.
  • The European Securities and Markets Authority (ESMA) has launched a consultation on ESG fund names. Feedback may be sent in until 20 February 2023, results are expected in Q1/Q2 2023.
  • The European Supervisory Authorities (ESAs) have published a call for evidence in order to compile their greenwashing report in Q1/Q2 2023. The report aims at gathering potential greenwashing definitions and practices (including relevant data) in the whole EU financial sector, based on feedback from all involved stakeholders of the industry.
  • ESMA will review the product governance requirements within MiFID II under the aspects of the recent sustainability changes to that regulation. A report is expected in early 2023.

The quantity and complexity of the requirements once more drive the urgent need for a coordinated and holistic approach when implementing the new requirements.

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