FE fundinfo, a global provider of data, research and technology solutions for investment funds, has warned that as investor demand for sustainable investments increases, up to 5,600 funds based in Luxembourg and distributed in Switzerland could face significant headwinds. In a report on Thursday, October 3, 2024, FE fundinfo highlights that these potential impacts are linked to the growing adoption of Swiss climate scores, a framework that is gaining traction in the Swiss financial sector.
Introduced by the Swiss Federal Council in June 2022, the Swiss climate scores were developed in collaboration with the financial industry to improve transparency and align investments with climate goals. The scores evaluate investments using six key indicators: greenhouse gas emissions, involvement in fossil fuel activities, global warming potential, verified commitments to reach net zero , credible climate management and management efforts to achieve net zero.
Many funds domiciled in Luxembourg have not yet integrated these indicators, which, according to industry experts, could harm their competitiveness. As the Swiss government has made these indicators the best practice in terms of transparency, funds distributed in Switzerland are increasingly expected to publish climate-related data. This expectation particularly applies to Luxembourg-based funds, which are under pressure to align with these sustainability measures if they wish to attract Swiss investors.
Mario Gloeckner, head of business development at FE fundinfo for Austria, Germany, Italy, Liechtenstein and Switzerland, highlighted the importance of adopting these scores in the report. He said wealth managers and banks are increasingly taking into account investors’ sustainability preferences in their fund selection processes, and there is a growing need for detailed climate information. more pressing. He explained that major Swiss distributors and banks have already started to integrate Swiss climate scores into their databases, enabling more climate-friendly fund selection processes. According to Mr. Gloeckner, the production and disclosure of these scores is essential for Luxembourg funds to maintain their competitive advantage in Switzerland. By adopting Swiss climate scores, financial institutions would not only respond to market demands, but also contribute to broader global efforts to mitigate climate risks.
Mr. Gloeckner further emphasized that the adoption of these climate measures goes beyond simply satisfying a market requirement. It reflects a long-term commitment to sustainability and transparency, which is part of international efforts to combat climate change. “Luxembourg funds distributed in Switzerland that adopt this initiative not only strengthen their market position, but also play a crucial role in promoting a greener and more sustainable future for the financial sector and society as a whole,” concluded Mr. Gloeckner.
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