Switzerland’s federal government has been accused of downplaying the Swiss National Bank’s (SNB) climate responsibilities, after ministers adopted a report backing the governing board’s decision not to contribute to environmental action.
The report asserts that the SNB’s legal duty is to ensure price stability while taking account of economic developments, and it should consider climate change only insofar as it affects its primary objectives. It argues that any expansion of this remit would weaken its focus and politicise monetary policy.
Responding to the decision, WWF Switzerland strongly rejected the suggestion that the adoption of pro-climate policies would be at odds with the SNB’s mandate.
“The twin crises of biodiversity and climate have a direct impact on price and financial stability,” said Thomas Vellacott, the charity’s managing director. “Therefore, ensuring price stability and ensuring financial market stability by central banks must contribute to mitigating climate change and halting biodiversity loss.”
Although the Swiss Federal Council’s report acknowledged that the Bank of England and European Central Bank have both committed to supporting governments’ climate policies in their respective jurisdictions, it explicitly opposed the SNB making such a move.
In doing so, it backed the SNB’s governing board, which has so far rejected climate advocates’ calls to disclose its investment positions and associated greenhouse gas emissions, and to communicate its strategy to align with the Paris Agreement’s 1.5ºC trajectory and biodiversity targets. Campaigners are demanding immediate divestment from fossil fuel projects, which the central bank has also opted against.
Any move by the SNB to decarbonise its operations would have significant global implications due to the huge size of the central bank’s foreign currency portfolio. The bank holds foreign currency assets worth well over US$1tn. It has excluded companies involved in coal mining but ruled out expanding this policy into other areas.
Campaigners are now turning their attention to the Swiss parliament. The SNB’s mandate is set out in the National Bank Act, and groups including WWF are pushing for legislators to clarify that action on climate and biodiversity loss is consistent with the bank’s duties under this law.
“Parliament is responsible for specifying the legal framework, so that the SNB uses its room for manoeuvre and refrains from all activities that are incompatible with the Paris climate agreement and the biodiversity goals,” said a statement from the Swiss Climate Alliance.
A study last year found that equity owned by the SNB is associated with carbon pollution equivalent to nearly a quarter of Switzerland’s domestic emissions. Its portfolio generates between 12 and 20mn tonnes of CO2 per year which could be reduced by 99.7% with a reallocation of just 2%, the academics reported.
This page was last updated November 7, 2022
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