Relevant climate regulations for banks in Switzerland 

Switzerland has ratified the Paris Agreement on climate change and adopted a range of regulations to implement it. Those particularly relevant to business are the Federal Act on Climate Protection Targets, Innovation and Strengthening Energy Security (CIA), the CO2 Act, and the Ordinance on Climate Disclosures. All three are currently in force; after resolving differences, Parliament finalised the revised CO2 Act covering the years 2025–30 in spring 2024. These regulations interlock and, taken together, make up the legal framework for climate regulation covering the Swiss economy.

Paris Agreement on climate change

The Paris Agreement is a legally binding instrument under the United Nations Framework Convention on Climate Change (UNFCCC) which came into force on 5 October 2016. Switzerland ratified the Paris Agreement on 6 October 2017, thereby committing to halve its emissions from 1990 levels by 2030. It also announced that it will reach net-zero greenhouse gas emissions by 2050, meaning that it will not emit more greenhouse gases into the atmosphere than can be absorbed by natural carbon sinks (such as forests) or using carbon capture technologies. The principal means by which Switzerland complies with its international obligations is the CO2 Act.

Of particular relevance to the financial centre is Article 2.1c of the Paris Agreement, which aims to make finance flows consistent with the global reduction targets. Work to clarify precisely what this means is still ongoing, under the umbrella of “climate finance”.

Federal Act on Climate Protection Targets, Innovation and Strengthening Energy Security (CIA)

On 18 June 2023, the Swiss electorate voted in favour of the Federal Act on Climate Protection Targets, Innovation and Strengthening Energy Security (the indirect counter-proposal to the Glacier Initiative), which commits Switzerland to achieving net-zero emissions (climate neutrality) by 2050.

The Act sets out interim and final emissions reduction targets and is intended to guide funding towards more climate-friendly investments. The financial centre will also have a part to play: the Confederation can conclude agreements with banks, insurers and pension funds setting out specific targets and measures.

CO2 Act

The Swiss Federal Act on the Reduction of CO2 Emissions (CO2 Act) builds on Articles 74 and 89 of the Swiss Constitution, under which the Confederation is required to “legislate on the protection of the population and its natural environment against damage or nuisance” (Art. 74) and “the use of energy by installations, vehicles and appliances” (Art. 89). The finalised CO2 Act for the years 2025 to 2030 is intended to help Switzerland achieve its goal of net-zero emissions by 2050 while securing its energy supply, specifically by implementing the targets laid down in the CIA. It was adopted by both chambers of Parliament in the 2024 spring session.

Ordinance on Climate Disclosures

The Ordinance on Climate Disclosures governs reporting on climate issues by companies in accordance with Article 964a of the Swiss Code of Obligations (CO) as part of environmental matters within the framework of non-financial matters in accordance with Article 964b of the CO. Climate issues include both the impact of the climate on companies and the impact of their activities on the climate (termed “double materiality”).

The Ordinance came into force on 1 January 2024 and is based on the recommendations of the internationally coordinated Task Force on Climate-related Financial Disclosures (TCFD). In particular, it covers implementation of the recommendations on governance, strategy, risk management, metrics and targets, including transition plans that are compatible with the Swiss climate targets. This focuses special attention on the goals and provisions of the CIA and the revised CO2 Act that are derived from the Paris Agreement.

From 2024, the Ordinance requires Swiss banks to publish transition plans based on the TCFD recommendations that comply with the goals of the Paris Agreement and the specific provisions contained in Swiss law. The disclosures will be made for the first time in 2025. Over and above the international standards, the Ordinance focuses on double materiality. Its provisions are not specific to the financial market and are therefore broadly applicable to the economy as a whole (large Swiss companies). Although the Ordinance refers explicitly only to disclosure, its prime objective is clearly to align business activity with the Confederation’s climate targets, as this is essential to a transition plan that meets them.

Under the CO (Art. 964c para. 1), the report on non-financial matters requires the approval and signature of the supreme management or governing body and the approval of the governing body responsible for approving the annual accounts. A lack of proper disclosure can result in liability and reputational risks for the board of directors. Compliance with Articles 964a, 964b and 964l CO is key. Deliberate or negligent misinformation or omission of information, as well as failure to adhere to the retention and documentation requirements, constitute a criminal offence. However, the disclosure is deemed to have met the necessary requirements if it is based on the TCFD recommendations. The climate disclosure obligation can also be complied with in other ways (Art. 2 para. 2 of the Ordinance).