Expert views

Geneva could become the international centre of sustainable finance (en)

25 septiembre 2019
ITC Noticias
The Swiss city is making great strides in becoming a hub for sustainable finance

It is essential to mobilize financial centres to accelerate the transition towards a sustainable economy. The 17 United Nations Sustainable Development Goals (SDGs) cannot be financed only by public funds, so it is imperative to generate private capital. We believe in joint action by the public and private sectors to take advantage of the opportunities associated with sustainability. In this context, the role of the financial sector is key.

The trend is now clear: integrating environmental, social and governance factors into investment portfolios is becoming a major challenge; the green bond market continues to grow; and numerous governments are developing national strategies while financial
regulators envisage integrating environmental risks into market oversight.

The Swiss financial market has a historic opportunity to accelerate the transition towards more sustainable forms of development and also to benefit from associated market opportunities. Inaction would incur significant risks to the Swiss economy, notably in terms of stability of the financial system.

Geneva, thanks in particular to its internationally recognized knowledge of finance and the presence of numerous international organizations integrating this notion of sustainability, has some remarkable assets enabling it to position itself as an important centre for sustainable finance. Geneva is also the technical and operational centre of the United Nations for achieving the SDGs. Furthermore, as the birthplace of microfinance, it may already have among the best specialists in the field.

The presence of a state-of-the-art academic sector also helps create fertile ground for the development of sustainable finance. We are working closely with the University of Geneva, which has incorporated courses in sustainable finance into various curricula, to equip the next generation of financial-market actors with the proper tools. The Geneva Tsinghua Initiative, a partnership between the University of Geneva and Tsinghua University in Beijing, offers training opportunities associated with the SDGs on both campuses for students and professionals.

However, the nascent knowledge of sustainable finance still needs to be developed and promoted, as may be seen from the fact that Geneva’s classification in the Global Green Finance Index is far from the top ranks.

To achieve this aim, awareness is needed on the part of our financial institutions. Effectively, the shift to sustainable finance must come from within. In addition to the challenges associated with sustainable development, there are also significant economic opportunities to be seized. The role of the state in this regard is to alert these actors to the importance attached to the development of financial tools, products and concepts in accordance with the sustainability criteria. To this end, since 2010 we have been supporting Sustainable Finance Geneva (SFG), an association promoting sustainable finance.

We consider that the work to raise awareness of SFG has achieved its objectives. Although we cannot say that this phase is complete, we are currently aiming to move on to the implementation phase. Two flagship projects may be identified.

Firstly, we would like to reinforce and broaden our support for SFG to be able from now on to mobilize actors both in the world of finance and in international organizations with a view to collaboration and synergy. The Sustainable Finance Week in October 2019 in Geneva is a key stage in achieving our objective. This week, which will bring together a number of events on this topic, includes the presence of international names in finance as well as representatives of international organizations and governments.

The other working priority is to develop what might be termed a social enterprises stock exchange, forming a link between investors and undertakings with the same objectives. A study is underway to determine the broad outlines of this project.

In order to make Geneva a sustainable finance hub, we have also recently incorporated an international dimension into our strategy, which notably includes the arrival of the Secretariat of the International Network of Financial Centres for Sustainability.

The purpose of this initiative, which brings together the largest financial markets in the world, is to create a network for discussion, best practices and common principles fundamental to developing sustainability in finance. Integrating this network will enable us to position Geneva clearly on the world map of sustainable finance.

As a government, we also strive to lead by example. Not only was Geneva a pioneer in Europe when it adopted a law on public action for sustainable development in 2001, it was also the first Swiss canton to successfully issue green bonds for the financing of high energy performance buildings in 2017. The operation has attracted numerous investors and made it possible to raise 620 million Swiss francs ($626 million). The current objective is to renew this type of operation regularly.