The Federal Council wants the Swiss financial centre to be an international leader in sustainable financial services. To underscore this objective, it decided during its meeting on November 17, 2021, to prepare a basis for the issuance of green Confederation bonds.
Switzerland plays a leading role internationally in sustainable financial investments. The Federal Council intends to consolidate this position based on its report of June 2020 on “Sustainability in Switzerland’s financial sector”. The report lists various measures that should help to achieve the objective. One of these concerns the issuance of green bonds by the Confederation.
Green bonds enable an issuer to raise money on the capital market. Unlike with conventional bonds, however, the capital raised with green bonds cannot be used freely. It may be used exclusively for the (re)financing of projects that have a positive impact on the environment, e.g. promoting renewable energies, increasing energy efficiency, preserving biodiversity or constructing environmentally friendly buildings. The market for green bonds has grown robustly in recent years, both in Switzerland and internationally. Sovereign issuers in particular play an important role in this regard.
The Federal Council has been following this trend closely for some time and has decided to lay the foundations to enable the Confederation to issue green bonds as well. The issuance of such “green Confederation bonds” should enhance the application of international standards in Switzerland. In this way, the Federal Council can help to encourage those in the private sector to issue green bonds. Green Confederation bonds will not have a direct environmental impact on their own: political decisions are needed for concrete measures to protect the climate and the environment.
As instructed by the Federal Council, the Federal Finance Administration (FFA), in cooperation with the Federal Department of the Environment, Transport, Energy and Communications (DETEC), will prepare a framework for the issuance of green Confederation bonds and submit it to the Federal Council by the end of 2022 for a decision.