Federal Department of the Environment, Transport, Energy and Communications DETEC published a report on climate mitigation metrics for the Swiss financial center. The report discusses using Swiss Climate Scores and Paris Agreement Capital Transition Assessment (PACTA) to regularly assess the financial sector's progress on climate implementation. Swiss Climate Scores provide indicators to measure portfolio exposure to fossil fuels, greenhouse gas emissions, climate stewardship, and commitment to net-zero. PACTA conducts voluntary, anonymous assessments of listed equity and real estate portfolios to analyze alignment with climate scenarios. PACTA results showed pension funds and insurers have higher exposure to renewable power than banks and asset managers. Key questions are what incentives the selected metrics

1. Federal Department of the Environment, Transport,
Energy and Communications DETEC
Federal Office for the Environment FOEN
International Affairs Division
Climate mitigation
metrics for the Swiss
financial centre
22 February 2023

2. Context
• Strategy incl. definition of
Sustainable Finance
• No mandatory measures
except mandatory TCFD
climate-related financial
disclosure for larger listed
companies (entry into force
2024)
• Multiple voluntary
measures on various levels
• Swiss Climate Scores
• PACTA
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Climate Mitigation Metrics for the Swiss financial center
=> regulary assess progress on implementation

3. 3
Climate Mitigation Metrics for the Swiss financial center
Swiss Climate Scores
Greenhouse Gas
Emissions
Exposure to fossil
fuel activities
Credible climate
stewardship
Management to
net-zero
Global warming
potential
Verified commitments
to net-zero
Set of indicators on
portfolio level
• Systematic approach
• Indicators and minimal
criteria for equity/
corporate bonds
• No prescribed
methododology
• Product declaration vs.
label
• Learning exercise
-> will be updated and
enhanced in 2023

4. 4
Climate Mitigation Metrics for the Swiss financial center
Swiss Climate Scores

5. Paris Agreement Capital Transition
Assessment (PACTA)
• Voluntary measure
• Results for the Swiss financial sector,
institution and portfolio level
• Representative participation
• Aggregate, anonymous, science-based,
comparable and forward-looking financial
sector assessment
• Coverage: listed debt and equity, real
estate, mortgages
• Quantitative assessment and qualitative
questionnaire focusing on transition
pathway and climate stewardship
• PACTA delivered most Climate Scores
free of charge to participants (~2000
portfolios)
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Climate Mitigation Metrics for the Swiss financial center

6. Plans until 2050 Banks Pension funds Asset Managers Insurances
Heating replacement ~1% ~23% ~6% ~14%
Refurbishments ~2,5% ~46% ~58% ~47%
PACTA Results 2022: Real estate and
mortgages
Real estate portfolios Mortgage portfolios

7. PACTA Results 2022 equity: Exposure to
power fossil vs. renewable
Pension
cash
Banks Insurances
Asset
Managers

8. PACTA Results 2022 equity: Renewable
power exposure increased, expansion plans
climate-aligned
Production
(MW)
in
rates
of
change
(normalised
to
the
year
2021)
Climate scenarios
Renewable energy capacity development,
listed equity

9. PACTA Results 2022 equity: Oil production
exposure decreased, but strong expansion
plans
Production
(GJ)
in
rates
of
change
(normalised
to
the
year
2021)
Climate scenarios
Oil production capacity development,
listed equity

10. Key question: Which incentives do we set with the selected
indicators / metrics? How can we maximize the potential real
economy impact?
• Mix of indicators is key
• Metrics need to go beyond status quo and cover elements
necessary for the transition e.g. as upscale of renewables
• Forward looking indicators as part of the mix (incl. short-
/mid-term scope)
• Include technology and not only emission related metrics
in the mix
• Aggregation and comparability only possible based on
underlying common methodology
-> Purpose is key for methodology choice
• Environmental integrity risks related to GHG
performance metrics in financial sector
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Climate Mitigation Metrics for the Swiss financial center
Main Learnings

11. What do we wish for?
• Anchor broad indicator set
beyond GHG metrics
• Create incentives for secotral
decarbonization approaches
• Identify set of metrics to assess
short-term and mid-term targets
• Increase comparability and
credibility
• Don’t let the perfect be the enemy
of the good
• focus on the areas with highest
potential climate impact by
financial institutions
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Climate Mitigation Metrics for the Swiss financial center