FINMA monitors the risk situation at Swiss financial institutions. This also encompasses climate risks, which increasingly pose a threat to institutions and the financial centre. FINMA’s aim in doing so is to ensure the resilience of the institutions. They should remain functional even if climate-related risks actually materialise. This serves to protect bank clients, insured persons and investors.
Why should Swiss banks and insurance companies concern themselves with the risks of climate change and nature degradation? The answer is clear: These risks are tending to recur with increasing frequency and entail financial and other risks. The last few years have clearly shown this: In places such as Brienz, Kandersteg and Blatten, mountains have started to slide, threatening entire villages. There were severe storms in Switzerland in 2024. They led to fluvial flooding, pluvial flooding and landslides. Houses and streets were flooded, a bridge collapsed and power lines were destroyed. Science is clearly telling us that the frequency of such events will only increase in the future. FINMA sees a need for action to safeguard the functioning of the Swiss financial centre in the face of climate risks and to provide the best possible protection for financial market clients.
FINMA’s climate risk report
In its annual Risk Monitor, FINMA reports on the greatest threats to the Swiss financial centre. It has also repeatedly emphasised the longer-term risks associated with climate change. FINMA has published an annual climate risk report since 2025. By doing so, it is fulfilling its obligations under the CO₂Act. The report presents the current situation regarding climate risks at Swiss financial institutions, how the institutions are dealing with them and what steps FINMA itself is taking. FINMA also concludes that the risks posed by climate change – both through changes in the economy and through direct impacts such as natural catastrophes – will increase in the future. Financial institutions are actively working on integrating these risks into their overall risk management.
FINMA’s expectations
FINMA expects financial institutions to analyse the climate risks to which they may be directly and indirectly exposed. Financial institutions should also recognise the financial risks that arise for them as a result, whether in their mortgage portfolio, investments or insurance activities. They should report on these transparently and limit the risks. FINMA published its expectations to banks and insurers in its Circular 26/1 “Nature-related financial risks”. From 2028, the institutions are also expected to implement these expectations for other nature-related risks, such as risks ensuing from loss of biodiversity or other environmental problems.
FINMA examines how institutions are addressing climate risks
FINMA regularly collects relevant information and key figures on climate risks from medium-sized to large banks and insurers. This enables it to analyse which institutions are particularly affected by climate risks through their business activities. For example, it recognises which banks are investing heavily in companies whose business model is at risk from climate change. Or it recognises which insurers have set themselves ambitious greenhouse gas reduction targets, but do not explain how they intend to achieve these targets. This can damage the insurers’ reputation and expose them to legal risks.
FINMA holds regular supervisory discussions with the larger institutions to analyse how these institutions are protecting themselves against climate risks. It also carries out on-site inspections during which it checks compliance with FINMA’s requirements, identifies weaknesses in the institutions’ procedures and demands improvements.
FINMA conducts forward-looking analyses
FINMA aims to understand the financial impact of climate change on the Swiss financial centre from a forward-looking perspective. To this end, it works closely with the Swiss National Bank (SNB) and carries out scenario analyses at individual institutions to examine the financial impact of different scenarios on the institution. FINMA and the SNB are also working together on analyses of the loss potential for the Swiss financial centre. For example, they are investigating the extent to which risks from natural disasters can lead to losses in the Swiss property sector.
Conclusion: Climate and nature-related risks will not disappear but will increase. FINMA will continue to focus on risks arising from climate change and the destruction of nature. It is important that banks and insurance companies strengthen their resilience to these growing challenges – for a stable Swiss financial centre and to protect financial market clients.
