Swiss central bank discloses carbon footprint – but plans no big investment shift

April 2, 2024|Written by Katy Lee|Swiss National Bank

Switzerland’s central bank has disclosed the carbon footprint of its portfolio for the first time – while arguing that its mandate does not allow it to make major changes to its investment strategy to speed up the green transition.

The Swiss National Bank (SNB) included its first ever transition plan in its 2023 Sustainability Report, setting out how it intends to reduce its operational emissions to net zero by 2050.

It included plenty of data on its own environmental footprint, from the waste produced at SNB offices to emissions linked to staffers’ travel.

And it revealed various emissions metrics relating to the equities, corporate bonds and government bonds held in its vast foreign exchange reserves.

However, Klima-Allianz Schweiz – a network of 140 civil society groups pushing for climate action – pointed out that the report largely ignores the emissions from the supply chains of the companies financed by the SNB, otherwise known as scope 3 emissions.

The alliance charged the SNB with underestimating its financed emissions by a factor of three to four, noting that when scope 3 emissions are taken into account, taking the 10 largest companies with significant fossil fuel infrastructure alone adds up to the equivalent of more than 12mn tonnes of CO2 emissions. That figure is less than the total financed emissions reported by the SNB.

“The Swiss National Bank has finally admitted that climate change can have far-reaching consequences for the economy and financial markets,” the Klima-Allianz said.

“However, the SNB is still not setting climate targets for its investments, and it continues to ignore the important connection between climate and nature protection and the stability of the financial system.”

The SNB defended the current state of its portfolio – including its significant investment in fossil fuels – by arguing that its diversification strategy means the portfolio reflects the make-up of “the global universe of companies”. The transition to a more sustainable economy is being reflected in the portfolio as it happens, it said.

“In regulatory policy terms, the SNB is not authorised to pursue structural policies. Thus, it may not influence economic, political or social developments through its investment policy. This also applies to pursuing a plan to reduce the [greenhouse gas] emissions related to its investments.”

SNB chief Thomas Jordan, who steps down in September, has defended a narrow mandate for central banks that does not involve a major role in fighting climate change.

His departure has prompted suggestions that he could be replaced by a governor more willing to engage with the idea that central banks should play an active role in greening the economy, given the impact of climate change on financial stability.

This page was last updated April 3, 2024

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