Switzerland has mandated financial products and funds labelled as sustainable, green, or ESG to disclose how they intend to achieve their sustainability goals.
According to ESG Today, markets in Switzerland will be required to align or contribute to specific sustainability goals, with providers required to disclose how they intend to achieve the goals.
The proposed rules were unveiled by the Swiss Federal Council. The Council stated that the proposals form part of efforts to prevent greenwashing, or the mischaracterisation or exaggeration of the sustainability characteristics and attributes of financial products and services.
According to a position paper release by the Federal Council, financial products that feature a sustainability label will be required 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.
Under this definition, products that are aimed at reducing ESG risk, without pursuing a specific sustainability goal, will not qualify for a sustainable label.
Additional proposals include disclosures regarding the products sustainability approach, regular reporting on the sustainability goals, independent third-party verification to ensure the credibility of the sustainability goals, and recourse to legal action in the event of non-compliance.
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