Focus on ESG

The Financial Accounting Standards Board in the US recognises that “more comparable standards have the potential to reduce costs for both users and preparers of financial statements and make worldwide capital markets more efficient.”[i] Similarly, the IFRS Standards are driven by a goal of “enhancing the international comparability and quality of financial information, enabling investors and other market participants to make informed economic decisions.”[ii] At least one study has even found that investors attach a higher value to reported earnings when firms exhibit greater accounting comparability than industry peers.[iii]

Unfortunately, for sustainable investment, the non-financial information covered within various ESG factors is currently more difficult to compare than its financial counterpart.

Investors turn to a plethora of standards and frameworks for guidance on what ESG information to report and how to report it. From the SASB Standards for financially material ESG infor…

Political Situation

An important basis for Sustainable Finance has been the Federal Council's decision to achieve the net zero target for CO2 emissions in Switzerland by 2050 (Federal Council, media release, August 2019). The temperature increase is to be limited to below 1.5 degrees Celsius. The aim is also to protect biodiversity, which is endangered by climate change. The fundamental question here is what contribution the financial industry can make, which - unlike the real economy - is not primarily responsible for CO2 emissions.

On the one hand, the regulation of sustainable finance aims at directing financial flows in a climate-friendly way. In other words, it has a steering function. However, since climate change indirectly affects financial institutions as lenders and business partners of the real economy, it should also serve the stability of financial institutions and the financial market. Furthermore, it should prevent customer deception (greenwashing).

Finally, sustainab…