Committed to a greener Swiss economy

Decarbonisation with a net zero obligation is the Swiss economy’s concrete contribution towards a committed climate policy and a greener future. There are plenty of good reasons why Switzerland as a business location will benefit from this commitment. 

Tracking the carbon footprint

Decarbonisation refers to the elimination of all CO₂ elements within a value chain. Where this can’t be achieved naturally, carbon is offset through the meaningful trading of emissions within the value chain. This form of offsetting is part of the Paris Agreement and is aimed at preventing obligations from being met purely by outsourcing emissions to other parties. 

The targeted decarbonisation of the economy is based on legal frameworks and self-responsible commitment on the part of the economic players (see blog post ‘Change needs a framework’). An increasing number of companies have communicated their commitment to net zero carbon emissions and the next few years will be crucial for successfully implementing these plans.

Repeated demand

Efforts to reduce carbon emissions are currently under way in many economic sectors. However, suitable solutions are not yet available to tackle all of the challenges. This is because innovations and technologies can only be sufficiently scaled in part, as the hydrogen technology example shows (see box down below). Also, the 20 to 30-year time frame of Switzerland’s long-term climate strategy exceeds companies’ usual planning horizons.

Beyond national borders

Nevertheless, there’s a degree of urgency for companies to incorporate the topic more actively in their strategic decisions, since Switzerland is disproportionately affected by climate change. Changes to the climate are having a major impact on our Alpine nation and the water tower of Europe. Switzerland is, for example, warming up at twice the global average rate. The costs of unabated climate change upon society and the economy by far exceed the financial investment required for climate protection measures. The Federal Office for the Environment (BAFU) expects annual losses of up to 4% of gross domestic product by 2050 as a result of the impacts of climate change. So, the net zero target is already of economic importance.

Climate change is also having short-term and medium-term impacts on businesses. The Swiss private economy has tight international ties. From procurement through to distribution and financing, Swiss companies rely on foreign partners or, like finance companies, conduct a significant part of their activities abroad. It’s therefore understandable that Swiss companies often also have to take foreign regulations into account. One example is the requirements resulting from international efforts like the Green Deal or the EU action plan for financing in line with ESG criteria (environment, social and governance) and the generally rising ambitions, which – propelled by a heightened sense of awareness and urgency – impact multinational corporations in particular. However, this also applies to Swiss companies with corresponding activities in the EU or other countries and to companies that are exposed to cross-border financial flows. 

Increased expectations

The expectations of consumers, employees, interest groups and investors have changed enormously. They often expect companies to comply with ESG criteria. Also, the pressure is increasing for companies to sustainably reduce emissions as part of their sustainability strategy, as external carbon offsetting will no longer be sufficient in light of the stricter regulations and a general public which is becoming more and more sensitive to the issue.