The Swiss Federal Ministry of Finance (FDF) today announced that it will go ahead with plans to propose regulations to tackle greenwashing in the financial sector, including investment and disclosure rules for financial products with labels such as ‘sustainable’,’ green’ or ‘ESG’. ‘
The announcement follows the December 2022 publication of a paper from the Swiss Federal Council setting out its position on preventing greenwashing, or the risk of a financial product being falsely or misleadingly portrayed as having sustainable features.
Measures set out in the Council’s greenwashing prevention position included a requirement that financial products with a sustainability label pursue at least one investment objective in addition to their financial objectives, align with one or more specific sustainability objectives, or contribute to the achievement of specific objectives. sustainability objectives, and for product documentation to specify which of these features, or combination of features, apply.
The Council noted that products aimed at reducing ESG risks, without pursuing a specific sustainability goal, do not qualify for a sustainable label under this definition.
The Council’s proposals also include transparency rules, including requiring financial services providers offering sustainable investment products to describe their sustainability approach, and how this approach is achieved and measured, as well as regular reporting on the defined sustainability objectives, together with verification by an independent third party . party.
At the time, the Federal Council also mandated the FDF, together with other representatives of government agencies, regulators and industry and NGO organizations, to assess how the proposals could be implemented. With today’s announcement, the FDF said it would implement the Council’s position by proposing principles-based state regulation, potentially supplementing regulation with industry self-regulation.
However, the FDF added that if the financial sector presents a self-regulatory solution that meets the Council’s position, it will refrain from further regulatory efforts.
The FDF has committed to submitting a consultation draft for the proposed regulation by August 2024.