Sustainable finance should not suffer from the disappearance of any single initiative.

It did not survive five years. Since last Friday, it is official: the "Net-Zero Banking Alliance" (NZBA), a UN programme aiming for carbon neutrality of the banking sector, has announced the end of its activities. This rout, caused above all by the disengagement of the world’s major banks, is striking. In a context still marked by climate urgency and energy tensions, it invites reflection: how to give a clear course — a second wind — to sustainable finance? And what role could Switzerland play in this reconstruction?

We conclude our series on sustainable finance with Sabine Döbeli, Chief Executive Officer of Swiss Sustainable Finance (SSF). Founded in 2014, this association brings together more than 200 members and partners: banks, asset managers, institutional investors, service providers, research and education organisations, as well as various other organisations committed to responsible finance.

The disappearance of the NZBA is a blatant setback for the banking sector in the quest for truly sustainable finance. Ten years after the Paris Agreement, how can this be explained?

We must distinguish the evolution of an initiative from the banks’ own commitment to sustainability. On the latter point, we do not observe a significant retreat — at least in Europe. Many financial institutions have set ambitious climate targets and continue to pursue them in their main areas of activity. They regularly publish sustainability reports in which they account for the progress made.

In fact, I have not read in any statement regarding withdrawals from the NZBA that the banks have renounced their climate targets. In reality, these departures are much more a reflection of the current political climate and the fear of increased exposure to legal risks.

In this context, can banks truly defend their clients' interests while defending the climate?

If banks want to protect their clients' interests, it is essential that they take climate factors into account. The question is to what extent they can actively protect the climate — a point that should be further developed. Financial service providers play an important role in the transition to a sustainable and climate-respectful economy. In asset management, they can direct new capital to companies that develop sustainable solutions. By exercising their voting rights and engaging in dialogue with companies, they can encourage them to develop credible climate and sustainability strategies.

In the lending sector, it is important that the risks related to unsustainable activities are properly reflected in prices. In addition, banks can support and assist their corporate clients in their transition to more climate-friendly models. They also play a key role in the mortgage sector: they can inform their clients about subsidy programmes and grant green mortgages for renovations.

Finally, in asset management, banks can raise their clients' awareness of the opportunities offered by sustainable investments. However, it should not be forgotten that it is companies and individuals who make the decisions about the degree of sustainability they wish to adopt — and this depends strongly on the legal framework. Initiatives from all actors are necessary if we want to achieve the set climate goals — banks do not act in isolation.

The transition to a more sustainable energy supply continues, and banks as well as investors are indispensable to finance it.

Isn't the main problem today the impression that sustainable finance — and even the word "sustainability" — have become catch-alls without real substance?

I'm not sure I understand the problem you are referring to. Swiss Sustainable Finance has been publishing market studies on sustainable investments for many years. These are based on widely recognised approaches and terminologies and highlight the diversity of the sustainable investment market.

Investments that incorporate sustainability criteria pursue varied objectives: to improve the risk/return profile, to align with values or to actively contribute to improvements. Self-regulation by professional associations defines the types of investments that can be marketed as "sustainable".

Similar to ESG criteria, shouldn't the term sustainable finance be completely overhauled in order to chart a new course and regain the momentum that occurred in Paris in 2015?

Sustainable finance is a very diverse field of activity that contributes to change in multiple ways. In addition to investments, it also includes instruments such as green and sustainable bonds or sustainability-linked loans. All play an important role in supporting the economy in its transition to a sustainable future.

Even if some countries are currently attempting to step back, the global trend towards greater sustainability remains strong. One example: in China, last year, 56% of newly installed energy capacity came from renewable sources, compared with only 2% for nuclear. The transition to a more sustainable energy supply continues, and banks and investors are indispensable to finance it.

What actions could be taken to change the current narrative around sustainable finance, a narrative now tainted by the decline of the NZBA?

I do not think that sustainable finance will suffer from the end of a single initiative. The real challenge lies in the global political situation, growing conflicts and wars, as well as the erosion of international trade agreements. These developments generate fears, tie up public funds that we would need elsewhere and slow down the urgent transformation to be undertaken. In the short term, this can also affect the performance of certain sectors. But in the long term, the trend is clear: companies with sustainable business models are better prepared for the future.

With events like "Building Bridges", shouldn't Switzerland do everything to secure a leadership role in sustainable finance?

That is precisely one of Building Bridges' key objectives. It is also why Swiss Sustainable Finance co-founded this initiative six years ago as a founding partner. Switzerland has considerable expertise and great innovative capacity in the field of sustainable finance, whether in thematic funds, impact investing or sustainable wealth management. It is a major opportunity for the financial centre, and Building Bridges helps ensure that Switzerland is perceived as a leading sustainable financial hub.

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