Reg­u­la­tion and sus­tain­abil­i­ty

'As much regulation as necessary; as little as possible.’ At the SIA, we believe that this basic principle is especially important when it comes to sustainability. We can categorise the different levels of intensity of regulation based on the proposed objectives and mechanisms:


  1. Protecting both the individual and the viability of the financial centre by, for instance, introducing transparency and disclosure requirements or banning greenwashing.
  2. Encouraging companies to meet sustainability targets without legal sanctions, such as asking for transition plans or disclosing green asset ratios.
  3. Regulating / implementing (compulsory) guidelines on sustainability targets with measures that go beyond risk assessment, e.g. by introducing penalising factors.


In accordance with the basic principle set out above, the most moderate (regulatory) measures needed to achieve sustainability goals should be put in place. The priority for the first step is to protect policyholders and the viability of the financial centre. Moderate regulation does not entail compulsory measures unless necessary. Such controls could, for instance, mean insurance companies being forced to withdraw from particular investments that would have supported them with their transition and thus helped speed up the process of building a more sustainable society

Strict regulations in this area could therefore intensify or even cause transition risks. The key is to create the optimum conditions for building a financially and environmentally sustainable economy with minimal disruption.

Calculating risk is at the heart of the insurance business

With the commitments being made at company and sector level, the insurance industry is proving that the current regulatory framework is incentivising industry players to introduce and drive forward financial and environmental sustainability initiatives. For example, insurers have set themselves the target of achieving net-zero emissions or have joined net-zero partnerships. This is reflected not only in their investment management, but also in their core business of assuming and assessing risks. The impact of climate change on the insurance industry (increasing frequency and intensity of major loss events) requires insurers to address these effects in detail as part of their risk management. It should be noted that climate change is not a new risk in and of itself; instead it represents an additional risk factor that has repercussions for existing risk categories.

The effects of climate change are therefore fully reflected in the existing regulatory capital requirements. This means that, despite the impact of climate change, insurers are in an excellent position from a financial and risk management perspective to fulfil their role as risk carriers for society.

Additional regulations in this regard would cause risks to be double-counted and would disproportionately push up capital requirements. The extra capital tied up could even be counterproductive for sustainability efforts, as there would be less money available to invest in sustainability initiatives.

Transparency is key

Measures to encourage or even enforce activities in pursuit of sustainability targets should still only be implemented with caution in the insurance industry. The priority is to protect the individual and the functioning of the financial market, which can be supported and achieved through disclosure and transparency requirements

The work of the State Secretariat for International Finance (SIF) aims for similar outcomes. Current international developments in this area should be monitored closely. International standards, such as those set by the International Association of Insurance Supervisors , are becoming ever-more important, with international texts such as the Task Force on Climate-Related Financial Disclosures (TCFD) recommendations increasingly being adopted in full by national legislators. This is strengthening harmonisation across countries.

The SIA believes that for the Swiss financial centre to be competitive, it is crucial that Switzerland follows suitable international standards but without a ‘Swiss finish’ in which requirements are made stricter. It is therefore important for Switzerland to be involved on the international stage and help shape the development of these standards with a market-oriented ethos.

Efforts to ensure transparency across the entire financial sector hinge on similar action being taken in the real economy. Without a robust set of relevant data on sustainability in industries (including CO2 emissions), disclosures are often based on estimates.

Including the real economy in sustainability discussions and activities is essential to ensuring that policyholders and consumers are protected. Christoph Baumann, Head of the SIF’s Sustainable Finance Taskforce, came to the same conclusion in the SIA’s Annual Report 2021, saying: ‘The financial centre relies on data from the real economy to ensure that it can optimise how it supports the transition to a net-zero economy. Transparency from major companies about their environmental impact is essential for a properly functioning market.'