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Climate stress test for the Swiss financial centre

The Swiss National Bank's investments contribute to a catastrophic temperature rise of 4-6 degrees. This is in contradiction to the bank's own investment guidelines, which exclude investments in companies that systematically cause serious environmental damage. On the occasion of the General Assembly on 27 April, the Climate Alliance calls for a climate stress test and publishes concrete recommendations on how the stability of the financial system and the climate could be protected.

The National Bank's equity investments are responsible for more than the annual CO2 emissions of the whole of Switzerland. The bank's greenhouse gas emissions come mainly from coal, oil and gas companies. The National Bank uses its money to finance exploration, development and production of new fossil fuel reserves. This is also confirmed by a new study by Artisans de la Transition in collaboration with Fossil-Free, which will be published on Tuesday 24 April.

The National Bank is still avoiding the issue of climate risk, even though Switzerland ratified the Paris climate agreement last year. In addition to reducing greenhouse gas emissions and strengthening adaptation to climate change, the agreement establishes the redirection of financial flows as an equivalent pillar, so that the goal of a warming of well below 2 degrees can be met.

Climate Alliance calls the Swiss National Bank to subject the Swiss financial centre to a climate stress test. The later the SNB takes effective measures, the more sudden there may be a crisis in the Swiss financial system.

The European Central Bank and eight central banks and supervisory authorities in England, France, Germany, the Netherlands, Sweden, China, Singapore and Mexico have already declared their leading role in climate protection.

In the view of Climate Alliance the Paris climate agreement cannot be implemented without the decarbonisation of the Swiss National Bank.

Recommendations on climate risk to the Swiss National Bank

With the following recommendations, the Climate Alliance shows how the SNB can invest in the existing mandate in a climate-friendly manner and fulfil its task of preserving financial stability by taking climate risks into account:

  1. In a public statement, the SNB acknowledges the Paris climate agreement and the UN Sustainable Development Goals and announces the first steps.

  2. As a precautionary measure, the SNB develops principles that enable climate risks to be controlled while maintaining the stability of the financial system.

  3. SNB begins by conducting climate stress tests and scenario analyses for the Swiss financial sector – insurance companies, banks, pension funds – and publishes measures to contain macro risks.

  4. SNB evaluates the exposure of its own investments to climate risks.

  5. SNB extends the investment guidelines to exclude investments in companies that systematically cause serious climate damage.

  6. SNB determines and publishes the 2°C compatibility and CO2 emissions of its securities portfolios.

  7. SNB reveals the measures it intends to take to achieve the 2°C compatibility path in good time and reduce CO2 emissions, and how it will measure their success.

  8. SNB starts by divesting from the coal companies and all the companies with the largest fossil fuel reserves of the Carbon Underground 200 list.

  9. For the other sectors exposed to climate risks (e.g. electricity producers, suppliers to fossil fuel companies or car manufacturers), SNB also takes a "best in class" approach. SNB supports those companies that are determined to implement the energy transition (e.g. by switching to renewable energies).

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