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Swiss Banks Predict Decline in Demand for Sustainable Financial Products

Key Findings from EY Survey
A recent survey by consultancy firm EY reveals that 86% of Swiss banks anticipate stagnation or a decline in customer demand for sustainable financial products in the medium to long term. This marks a significant shift as these green investment offerings have lost momentum, with consumer interest falling short of earlier expectations.

Current Market Dynamics
Sustainable investments remain predominantly a niche market segment within Switzerland. They are mainly adopted by institutional investors and affluent private clients, rather than the broader retail investor base. Banks report that green financial products have not achieved mainstream appeal, reflecting a more cautious market outlook.

Challenges Faced by Banks
According to participating banks, considerable hurdles hinder the growth of sustainable finance products:

• High Regulatory Burdens: Compliance requirements around sustainability are complex and costly.
• Data Management Costs: Collecting reliable sustainability data and reporting accurately demands significant resources.
• Disproportionate Benefit-Effort Ratio: Many banks find that the benefits do not always justify the considerable efforts involved.
• Top Concerns: Sustainability and climate reporting top the challenges list, followed by difficulties calculating carbon footprints, risk management, and addressing risks related to greenwashing.

Context and Outlook
Switzerland has long positioned itself as a leader in sustainable finance, yet the findings hint at a reality where regulatory pressures and operational costs curb enthusiasm for expanding these products. The Swiss sustainable finance sector faces the dual task of refining measurement standards and reducing the reporting burden to foster wider adoption.

Why It Matters:
This development signals caution for investors and sustainability advocates. While green finance remains vital for achieving climate goals, banks’ reservations emphasize the need for streamlined regulations and improved transparency to sustain long-term growth in sustainable investment products.

For more insights on sustainable finance in Switzerland and global trends, stay tuned to our blog dedicated to organic and sustainable products.

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