In the midst of the earthquake shaking the Swiss financial sector, a new report (1) highlights the failure of Swiss financial institutions to align their support to the energy sector with the need to address the climate crisis. With UBS agreeing to take over Credit Suisse, a new European fossil fuel financing giant looks likely to emerge. Together, UBS and Credit Suisse enter the top 20 of biggest banks and top 10 of largest asset managers (2). Report authors Reclaim Finance, BreakFree Switzerland, Greenpeace Switzerland, Alliance Climatique Suisse, Campax, Fossil Free and Grève du Climat urge Swiss regulators, who flew to Credit Suisse’s rescue, to ensure their financial institutions take immediate action against fossil fuel expansion.

The report finds that the major Swiss financial institutions – UBS, Credit Suisse, Swiss Life AM, Zurich and Pictet – lack robust climate policies. As a result, they continue to channel billions of dollars to the companies developing new coal, oil and gas supply projects, without almost any restrictions.

This continued support through loans and bonds to fossil fuel developers, without any conditions on ending their expansion strategies, flies in the face of expert climate advice. Research from both the Intergovernmental Panel on Climate Change (IPCC) and the International Energy Agency (IEA) show that there is no room for new coal, oil and gas supply projects  if we are to limit global warming to 1.5 degrees.

"The causes of Credit Suisse’s collapse are to be found in its culture of profit at any price and short-term vision, supported by some of its main shareholders, the Saudi Arabia & Qatar state oil and gas companies. It demonstrates the fundamental failure of the regulatory authorities who unconditionally bailed out the bank with public money for the UBS buyback operation. Regaining control over such a titan of finance through strict regulation is now key to face the climate chaos risk", said Morgane Nusbaumer from BreakFree Suisse.

The report shows that between April 2021 and August 2022 UBS and Credit Suisse provided at least US$8 billion in loans and underwriting to companies developing new coal projects and new oil and gas supply and midstream projects. UBS and Credit Suisse’s asset management branches held at least US$19 billion of investments in these companies, as of September 2022 (3).  Report authors note that, by buying Credit Suisse, UBS is taking over US$6 billion of banking deals, including those with Qatar Energy and ConocoPhillips. Through this transaction, which also includes the asset management arm of Credit Suisse, UBS’s exposure to fossil fuel developers will increase by more than US$8 billion.

The report reveals the prevalence of ad hoc decisions over systematic climate-related measures, which leads to inconsistencies and a lack of clarity in their relationship with fossil fuel expansionists. For example, Pictet, UBS AM and Credit Suisse AM voted in 2022 against the re-election of the Glencore chair, but continue to provide new capital to Glencore. Report authors point out that by failing to effectively engage with companies expanding fossil fuels, these financial groups contribute to increasing climate and financial risks.

"UBS is now one of Europe’s biggest banks and asset managers, and one of the biggest global supporters of fossil fuel development. The critical question is whether the new fossil fuel finance giant will change course and end its support for fossil fuel expansion. Swiss finance needs to stop bankrolling coal developers like Glencore and the Adani Group – and  regulators must ensure that any future rescue using public money is conditional on curbing financial flows to climate wreckers", said Lara Cuvelier, Sustainable Investments campaigner at Reclaim Finance.

"With the acquisition of Credit Suisse, UBS is also acquiring the responsibility for Credit Suisse’s financing of companies that are causing significant damage to the climate. This means UBS is becoming a de facto systemically important bank for the climate. The report reveals that the climate guidelines of the investigated  Swiss banks are insufficient to prevent them from continuing to support  the expansion of  fossil fuel production. This is incompatible with the banks’ climate goals. Switzerland is already increasingly suffering the consequences of the climate crisis. It is high time that Swiss banks and asset managers adapt their guidelines to their climate goals. They must withdraw support from companies involved in the expansion of oil and gas production", said Niki Vischer, Technical Expert for Sustainable Finance at Greenpeace Switzerland.

The authors urge Swiss financial institutions to adopt measures against fossil fuel expansion, in order to stop supporting coal, withdraw support from companies expanding oil and gas production and adopt robust engagement policies (4). They also call on Swiss regulators to condition any future support for financial institutions to the adoption of such measures.