The FINMA has published a new circular outlining stringent requirements for banks and insurers to manage climate and other nature-related financial risks effectively.
This initiative seeks to bolster the resilience of supervised institutions against environmental risks, safeguarding their clients and fortifying the Swiss financial centre.
Under the new guidelines, which will come into force on 1 January 2026, FINMA has adopted a broad spectrum approach to risk management, which encompasses not just climate change but other significant environmental risks. The regulations will be rolled out in stages, initially focusing solely on climate-related financial risks, acknowledging the varying degrees of topic maturity and institutional preparedness. By 1 January 2028, the regulations will expand to cover all nature-related financial risks.
During the intensive consultation phase, the circular saw mixed reactions. While industry associations voiced concerns, particularly over specific details, environmental advocates, civil society, and academic representatives hailed the initiative, even proposing more stringent measures. FINMA has taken these diverse viewpoints into account, adjusting its final provisions to reflect a balanced stance that also aligns with international standards and frameworks.
Banks and insurers falling within supervisory categories 3 to 5 are granted an extension until 1 January 2027 to comply with the provisions relating to climate-related financial risks, a year beyond the initial enforcement date.
As part of its strategic objectives from 2025 to 2028, FINMA is committed to proactive monitoring of the implementation of these new standards. This will ensure that institutions not only adhere to the regulations but also integrate these crucial risk considerations into their operational frameworks.
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