FINMA's climate disclosure expectations are becoming more demanding, and the 2026/1 circular extends requirements to nature-related risks for the first time. This guide explains what Swiss banks, insurers, and asset managers need to prepare, and how Swiss requirements interact with EU frameworks including CSRD and SFDR.
Switzerland has long positioned itself as a global hub for sustainable finance. The Swiss Federal Council's sustainable finance strategy, the Swiss Climate Scores framework, and FINMA's evolving supervisory expectations have together created one of the more demanding regulatory environments for financial institutions operating in or from Switzerland. Yet for many institutions, the precise obligations, timelines, and practical implications of Swiss climate disclosure requirements remain poorly understood.
This article sets out what Swiss-domiciled banks, insurers, and asset managers need to know about FINMA's climate disclosure expectations, how Swiss requirements interact with EU frameworks, and what institutions should be doing now to prepare.
Before examining FINMA's specific expectations, it is worth understanding that climate disclosure in Switzerland sits within a broader regulatory architecture involving multiple authorities and frameworks.
The Federal Council's Sustainable Finance Strategy sets the overarching ambition: Switzerland's financial sector should make a leading contribution to sustainable development and to achieving the goals of the Paris Agreement. This is not a binding legal requirement in itself, but it shapes the direction of travel for all regulatory bodies including FINMA.
The CO2 Act and net zero targets establish Switzerland's commitment to net zero greenhouse gas emissions by 2050, with an interim target of 50% reduction by 2030 relative to 1990 levels. Financial institutions are expected to align their financing and investment activities with these national targets over time.
The Swiss Climate Scores framework, introduced by the Federal Council in 2022, provides a voluntary but influential set of metrics for assessing the climate alignment of investment portfolios. While voluntary for now, the Swiss Climate Scores signal the direction regulatory expectations are moving, and several institutional investors have adopted them ahead of any formal requirement.
Against this backdrop, FINMA's supervisory guidance represents the most operationally significant set of obligations for regulated financial institutions.
FINMA's primary instrument for addressing climate risk is FINMA Circular 2016/1 on Operational Risks, which was updated to incorporate climate-related financial risks. Under this framework, FINMA expects supervised institutions to identify, assess, manage, and disclose the financial risks arising from climate change, covering both physical risks and transition risks.
The key obligations under FINMA's supervisory expectations include the following.
Governance. Boards and senior management are expected to have clear oversight responsibility for climate-related financial risks. This means climate risk must be explicitly addressed in risk governance frameworks, board-level reporting, and management accountability structures. FINMA examiners will ask who is responsible for climate risk, how it is escalated, and what the board receives in terms of regular reporting.
Risk identification and assessment. Institutions are expected to identify material climate-related financial risks across all relevant risk categories: credit risk, market risk, liquidity risk, operational risk, and insurance risk for insurers. Physical risks — exposure to floods, droughts, heat stress, and other climate hazards — and transition risks — exposure to policy changes, technological shifts, and changing market dynamics — must both be assessed.
Scenario analysis. FINMA expects institutions to conduct climate scenario analysis to understand how different climate pathways might affect their balance sheets and business models. The expectation is not a single prescribed methodology but a demonstration that the institution has seriously engaged with forward-looking climate risk assessment. NGFS scenarios are the most widely used reference framework.
Disclosure. FINMA expects climate-related disclosures aligned with the Task Force on Climate-related Financial Disclosures (TCFD) framework. Institutions should be producing TCFD-aligned reports covering governance, strategy, risk management, and metrics and targets.
Building on the 2016/1 framework, FINMA Circular 2026/1 introduces more specific and demanding expectations for nature-related financial risks alongside climate risks. This is the most significant regulatory development for Swiss financial institutions in the sustainable finance space and one that many institutions are not yet fully prepared for.
The 2026/1 circular extends FINMA's supervisory expectations to cover three additional dimensions.
Nature-related financial risks. For the first time in Swiss regulation, institutions are explicitly expected to assess their exposure to risks arising from nature loss and ecosystem degradation, including dependencies on ecosystem services, impacts on biodiversity, and the financial materiality of nature-related exposures across portfolios.
Double materiality. Institutions are expected to consider not only how climate and nature risks affect their financial position (financial materiality) but also how their financing and investment activities affect the climate and natural environment (impact materiality). This mirrors the approach taken in the EU's CSRD but applied within the FINMA supervisory framework.
Integration with TNFD. The 2026/1 circular is aligned with the Taskforce on Nature-related Financial Disclosures (TNFD) framework, meaning institutions that have invested in TCFD compliance will need to extend their capabilities to cover the additional dimensions of nature risk that TNFD introduces.
For Swiss financial institutions with operations, clients, or investors in the European Union, Swiss domestic requirements do not exist in isolation. The interaction with EU frameworks creates both complexity and opportunity.
CSRD. The Corporate Sustainability Reporting Directive applies to EU-incorporated entities above certain size thresholds, as well as to non-EU companies, including Swiss companies, that have significant EU operations or are listed on EU-regulated markets. Swiss financial institutions with EU subsidiaries or significant EU business may face CSRD obligations in addition to FINMA requirements. The good news is that CSRD and FINMA expectations are broadly complementary: investment in CSRD compliance, particularly double materiality assessment and ESRS-aligned reporting, builds capability that is directly relevant to FINMA expectations.
SFDR. The Sustainable Finance Disclosure Regulation applies to EU-registered financial market participants and advisers. Swiss asset managers distributing funds into the EU market, or managing EU-domiciled funds, face SFDR obligations including Principal Adverse Impact disclosure, entity-level sustainability risk integration, and product-level disclosure for Article 8 and Article 9 funds. FINMA does not require SFDR compliance for purely Swiss-domiciled activities, but institutions with EU market exposure face a dual regulatory burden.
EU Taxonomy. Swiss institutions are not directly subject to EU Taxonomy reporting requirements unless they have EU operations or EU-regulated products. However, many Swiss institutional investors use Taxonomy alignment as a reference framework for sustainable investment, and Swiss banks structuring green bonds or sustainability-linked products for European issuers or investors will find Taxonomy alignment increasingly expected by market participants.
The practical implication is that Swiss financial institutions with any EU exposure should be building regulatory capability that satisfies both Swiss and EU requirements simultaneously, rather than treating them as separate compliance workstreams.
The Swiss Climate Scores provide six metrics for assessing the climate alignment of investment portfolios.
Transparency on fossil fuel exposure covers the share of a portfolio invested in companies with coal, oil, and gas revenues above defined thresholds.
Verified commitments to net zero measures the share of a portfolio invested in companies with science-based net zero targets verified by the Science Based Targets initiative.
Global warming trajectory provides an assessment of the implied temperature rise of the portfolio based on companies' emissions trajectories, expressed as a degrees Celsius figure.
Engagement on climate covers evidence of active ownership and engagement with portfolio companies on climate issues.
TCFD reporting measures the share of a portfolio invested in companies with TCFD-aligned climate disclosures.
Real economy emissions reduction provides evidence that portfolio companies are actually reducing absolute emissions, not just improving emissions intensity.
For asset managers and institutional investors, the Swiss Climate Scores provide a practical reporting framework that is increasingly expected by Swiss institutional clients, including pension funds, foundations, and insurance companies, even in the absence of a formal legal requirement.
For Swiss financial institutions at any stage of their climate disclosure journey, the following priorities are most pressing in 2026.
Conduct a gap assessment against FINMA 2026/1. The 2026/1 circular represents a step change in expectations. Institutions that are compliant with the earlier 2016/1 framework need to assess what additional work is required to address nature-related risks, double materiality, and TNFD alignment.
Build or commission climate and nature scenario analysis. FINMA examiners are increasingly focused on the quality and credibility of scenario analysis. Institutions that are still using generic, high-level scenarios without portfolio-level granularity are exposed. The expectation is moving toward asset-level physical risk assessment and sector-level transition risk modelling.
Integrate climate risk into credit and investment processes. Disclosure is the visible output of climate risk management, but the more fundamental challenge is embedding climate and nature risk into the day-to-day decisions that drive portfolio composition. Institutions that can demonstrate genuine integration, rather than a parallel reporting exercise, are better positioned with FINMA examiners and with institutional clients and investors.
Map your EU regulatory exposure. If your institution has any EU operations, EU-domiciled funds, or EU institutional clients, a clear map of which EU frameworks apply and what they require is a necessary foundation for building an integrated compliance programme rather than duplicating effort across Swiss and EU workstreams.
Build board and senior management capability. FINMA's governance expectations are explicit: boards need to understand climate and nature risk in financial terms. Targeted briefings and training for boards and executive committees are increasingly a prerequisite for passing supervisory examination, not an optional governance enhancement.
Switzerland's regulatory trajectory is clear. The direction of travel is toward more comprehensive, more granular, and more integrated climate and nature risk management, with FINMA's 2026/1 circular marking the most significant step yet. Institutions that treat Swiss climate disclosure as a compliance exercise separate from their core risk management and investment processes will find themselves increasingly out of step with supervisory expectations and with the demands of institutional clients.
The institutions that are best positioned are those that have moved beyond disclosure as an end in itself and are building genuine analytical capability, embedding climate and nature risk into the decisions that matter, and using the regulatory framework as a stimulus for better risk management rather than just a reporting burden to be managed.
The regulatory requirements are demanding. But they are also an opportunity to build the kind of rigorous, credible sustainable finance capability that distinguishes institutions that are serious about the transition from those that are merely compliant with it.
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