Swiss insurers request self-regulation on greenwashing

The Swiss Insurance Association (SIA) has told the Federal Department of Finance (FDF) that its planned principles-based greenwashing regulation is not necessary and that the financial market can more effectively regulate itself. In a joint response to the proposals revealed at the end of October, issued with the Asset Management Association Switzerland (AMAS) and the Swiss Bankers Association (SBA), the groups said: “The three associations remain convinced that self-regulation is an effective and, compared to principle-based regulation, more flexible instrument to avoid greenwashing.” If future principle-based regulation for greenwashing does occur, then the finance associations “demand” that it should cover all players in the Swiss financial center and all specific financial products related to sustainability to create a “level playing field”. Furthermore, the associations said they would assume the Swiss regulation is compatible with international regulations and will avoid any kind of "Swiss Finish" or goldplating. The European Union is currently preparing its own greenwashing directive and the Swiss insurers, bankers and asset managers will want to ensure their national rules do not go further than these. The FDF’s announcement followed a paper last December by the Swiss Federal Council outlining its position on the prevention of greenwashing, or the risk of having a financial product falsely or misleadingly portrayed as having sustainable characteristics. Measures outlined in the Council’s greenwashing prevention position included requiring financial products that feature a sustainability label to pursue at least one investment objective, in addition to their financial goals, to align with one or more specific sustainability goals, or to contribute to the achievement of specific sustainability goals, and for product documentation to specify which of these characteristics, or combination of characteristics applied. The Council noted that under this definition, products that are aimed at reducing ESG risk, without pursuing a specific sustainability goal, will not qualify for a sustainable label. The Council’s proposals also included transparency rules, including requiring financial service providers offering sustainable investment products to describe their sustainability approach, and how the approach is achieved and measured, as well as regular reporting on the defined sustainability goals, along with verification by an independent third party. The Federal Council also instructed the FDF at the time, along with other government agency representatives, regulators and industry and NGO organizations to assess how the proposals could be implemented. The FDF said at the end of October that it would implement the Council’s position by proposing principles-based state regulation, with the regulation potentially supplemented by industry self-regulation. Importantly for the SIA and its fellow associations, the FDF also added that if the financial industry presents a self-regulation solution that meets the Council’s position, it will dispense with further regulatory efforts. The FDF committed to submit a consultation draft for the proposed regulation by August 2024. The insurers, bankers and asset managers are clearly going to push hard for the self-regulation option, arguing that they are already heading down that road. “The involved associations share the Confederation's objective of making the Swiss financial market a leader in the area of sustainability. The integrity of financial products and services is of paramount importance for the Swiss financial center. That is why AMAS, the SBA and the SIA reject any form of greenwashing,” they said. “Based on this motivation, AMAS, the SBA and the SIA had already taken measures in 2022 to prevent greenwashing and ensure the credibility of the Swiss financial center. In June 2022, SBA published two self-regulations in the area of sustainable finance, with minimum requirements for the consideration of sustainability criteria in investment advice as well as asset management and mortgage advice,” explained the associations. “AMAS published the ‘Self-regulation on transparency and disclosure for sustainability-related collective assets’ in September 2022. These self-regulations have been in force since 1 January 2023 and 30 September 2023 respectively. SIA is currently drafting a self-regulation for unit-linked life insurance products that builds on the self-regulations of the SBA and AMAS, which is expected to be adopted in the first quarter of 2024,” they added.

Swiss insurers request self-regulation on greenwashing

Insurers, bankers and asset managers demand no ‘Swiss finish’

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