Sustainability-linked investments in Switzerland decreased by 19% in 2022 due to challenges posed by a "fragmented" regulatory environment, according to a report by Swiss Sustainable Finance (SSF).
The report revealed that sustainability-related volumes dropped to CHF 1,610 billion last year, down from CHF 1,982 billion in 2021 and CHF 1,520 billion the previous year.
Despite the decline, sustainability-related investments still account for approximately 52% of the total Swiss funds market, indicating a minimal change from 2021.
SSF attributed the decrease to both market performance and the fragmented regulatory landscape in Switzerland.
The report highlighted the need for overarching principle-based rules across all financial sectors to safeguard investors and enhance the country's international competitiveness and reputation.
Furthermore, the report emphasised the impact of Switzerland's exclusion from the European Union (EU) regulatory framework.
The absence of alignment with the EU's Sustainable Financial Disclosure Regulation (SFDR) exacerbated the fragmentation issue, with 51% of sustainable fund volumes in Switzerland not classified under EU regulation.
The lack of clarity regarding SFDR classifications in the EU also added to the confusion in the market.
The report called for a standardised definition and common language for sustainable investing, as well as improved transparency in communicating objectives and results by market players.
It noted that different methodologies for classifying sustainability-related investments could lead to varied perspectives and highlighted the importance of clear and accurate communication in addressing these challenges.
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