Switzerland's national government sees no reason why the SNB should actively pursue climate policy. The Federal Council sided with the central bank.
Swiss National Bank (SNB) governing council member Andrea Maechler previously made it clear in 2019 that the SNB should refrain from pursuing a climate policy and that it was a matter for the political authorities. Since then, however, the debate over SNB's sustainability role has become even more heated. On Wednesday, the Federal Council adopted the report «The Swiss National Bank and Switzerland's sustainability goals,» essentially backing the SNB Governing Board.
Unlike the EU and UK
The position of the Federal Council is that expanding the SNB's mandate to include climate targets inevitably would lead to conflicts with the goal of price stability, thereby politicizing monetary policy. The SNB's focus on price stability already helps ensure the government and parliament have maneuvering room in pursuing social or environmental policy goals. Ultimately, the report concludes the clear division of tasks between the SNB, the Federal Council, and parliament to be correct and necessary from a regulatory perspective.
The government is explicitly not following the path taken by the EU or UK with their respective central banks, the European Central Bank (ECB) and the Bank of England which have climate policy objectives. However, they also have mandates to support general economic policy as a secondary objective in addition to the primary objective of price stability.
The SNB must limit itself to its existing mandate in the view of the Federal Council. The SNB takes climate, environmental and other sustainability aspects into account if they affect the price and financial stability or involve financial risks for the SNB.
Carbon-Free Monetary Policy
Still, the fact remains that the SNB invests part of its reserves passively, and broadly, in the stock market. Previously, this has meant the guardian Swiss franc also bought shares in defense companies or fossil fuel producers, earning criticism from environmental activists, but also politicians. According to a 2021 study, the SNB held shares in 27 companies counted among the 100 biggest polluters. At the same time, the central bank's investment policy was criticized for being non-transparent.
At the end of 2020, the SNB decided to exclude all companies that primarily mine coal from its portfolios. However, such measures are not particularly popular among the SNB's board of directors. President Thomas Jordan has already been quoted as saying: «You cannot assume that the climate will improve simply because the SNB removes a security from its portfolio.» Perhaps not, but it would be a start.
