Central bank official rejects green criteria for investments

“The balance sheet must fulfil the monetary policy goals," said SNB board member Andrea Maechler. Keystone / Peter Klaunzer

The Swiss National Bank (SNB)’s mission is not to make the world greener but to meet monetary policy goals, a top central bank official has declared.

The Swiss central bank is regularly accused of lagging behind in green investments. But board member Andrea Maechler said at an event in Zurich that it wasn’t the SNB’s job to use its investments to influence companies linked to climate change.

“We don’t have the goal to make the world greener. That’s not our mandate,” Maechler said. “The balance sheet must fulfil the monetary policy goals.”

The SNB must maintain flexibility in its investments in order to meet its monetary policy objectives, Maechler continued. It builds up its equity portfolio based on several weighted indices, which limits investments that meet only environmental criteria, she said.

The central bank does not buy shares in companies whose main activity is coal mining, Maechler stressed.

The SNB is an important global investor, with foreign currency assets close to CHF1 trillion ($1 trillion) built up over years to stem the appreciation of the Swiss franc.

Maechler said limiting the SNB’s investments over climate considerations would hurt its flexibility, vital to maintain an independent monetary policy.

Still, the central bank has drastically reduced its share of equity investments in energy companies from 11% to 3% over the last 10 years, Maechler added, following changes to their market value.

Criticism by climate

Environmentalists have long criticised the SNB and financial institutions for investing enormous sums in fossil fuel companies and thereby contributing to global warming.

On Thursday, WWF published the first results of a studyExternal link assessing measures taken by central banks and financial regulators to integrate environmental issues into their business.

It said the SNB and the Federal Financial Market Supervisory Authority (FINMA) fall far short of meeting requirements related to the global climate crisis and the loss of biodiversity.

The environmental organisation wants the central bank and FINMA to take better account of climate-related financial risks and to create a roadmap to show how such risks are integrated, not only in terms of investments but also in terms of bank reserves and liquidity.

It also demands FINMA publish an annual review of financial products offered in Switzerland in order to combat misleading information and so-called “greenwashing”.