Should the Swiss National Bank invest in fossil fuels?

The SNB invests in the largest oil companies in the world, including ExxonMobil Keystone / Matt Slocum

In Lausanne this week, climate activists won a first battle against financial institutions investing in fossil fuels. The environmentalists’ targets include not only private banks like Credit Suisse, but also the Swiss National Bank (SNB). 

The SNB has accumulated foreign exchange reserves of more than CHF800 billion ($830 billion) and is now one of the world’s leading institutional investors. It contributes to the prosperity of the Alpine nation and its inhabitants not only through its monetary policy, but also through its billion-dollar profits, part of which are paid out each year to federal and cantonal authorities. 

However, not everyone agrees with how the central bank generates profits. 

For example, more than 100,000 people have signed a people’s initiative that wants to ban the SNB and pension funds from investing in companies that produce war materiel. 

For climate activists, however, the bank’s participation in the fossil fuel market is most problematic. According to business magazine Handelszeitung, the SNB invests in the largest oil companies in the world, including more than CHF1 billion in the US company ExxonMobil alone. 

The SNB is to some extent “responsible for the damage caused by global warming”, says Climate Alliance SwitzerlandExternal link.

‘Not our job’ 

The SNB’s priority is to ensure price stability and “climate policy is not one of our jobs”, Andréa Maechler, a member of the SNB’s executive board, told Swiss public televisionExternal link, SRF. 

Patrick Odier, former president of the Swiss Bankers’ Association, also argues that setting an example when it comes to sustainability is not part of the SNB’s mission. 

Odier recalls that last year the SNB joined the Network for Greening the Financial SystemExternal link, a network of central banks and supervisory authorities set up to promote the environmental sustainability of finance and to achieve the objectives of the Paris Climate Agreement. 

However, as an SNB spokesperson points out, membership is intended to facilitate the exchange of experience between central banks and does not imply any change in investment policy – a change in policy that climate activists and Green politicians in the federal parliament really want to achieve. 

Blacklist for ‘dirty’ banks 

“Direct and indirect greenhouse gas emissions from the Swiss financial centre must be reduced to zero by 2030. Financing, investing and insurance activities involving fossil fuels must be stopped,” demands the climate strikers’ movement, ClimatestrikeExternal link. Financial institutions that do not comply with this demand will be blacklisted, it says. 

In their battle against the financial giants investing in black gold, the activists achieved a first significant victory this week. On Monday, a court acquitted the 12 people who had occupied a branch of Credit Suisse in Lausanne in 2018. The activists had staged a tennis match to denounce the fact that the bank uses the image of Roger Federer, of whom it is one of the main sponsors, but at the same time it invests in companies that damage the climate. 

Disinvest in oil?  

Jörg Gasser, CEO of the Swiss Bankers Association, agrees that in the long term, banks should stop financing companies that emit a lot of CO2. But in an interview with nau.chExternal link he also warned that a sudden change was not realistic, as it would have negative consequences for the economy as a whole. 

For his part, Jean-Pierre Danthine, former deputy director of the SNB, told Swiss public radioExternal link, RTS, that the banking sector was making an “incredible conversion” to green investments. But withdrawing investments from oil stocks was a mistake, he said, arguing that it was more effective to remain the owner of an oil company and take part in general meetings to be able to ask, for example, not to exploit new wells or coal mines. 

This strategy is being followed by a group of shareholders of the British bank Barclays, which, as Le Temps reportedExternal link, has tabled a resolution calling on the institution to give up financing energy companies that do not comply with the Paris Agreement.

(Translated from Italian by Thomas Stephens)