Sustainability in Banking: Balancing regulation, customer needs and corporate responsibility

Sustainability: Definitions and perspectives

Sustainability is a key strategic pillar for Swiss banks. The way in which it is implemented varies and is partly shaped by different interpretations of the concept, ranging from the Brundtland definition to the triple bottom line. Some institutions integrate sustainability into their identity, while others break it down into values, financial materiality and impact. There is a general consensus that sustainability must be firmly embedded in a bank’s vision, strategy and product development.

The role of the financial services industry in sustainability

Banks play a central role in promoting sustainable development. They channel capital into sustainable projects as well as businesses, and are increasingly enabling the transition. Collaborations with energy advisors, subsidy programmes and other partners help enhance their measurable impact.

Market readiness and customer interest

Sustainability has evolved from a niche topic to a fundamental requirement, particularly among institutional clients. Retail clients are showing growing but selective interest. Many of them want clear communication and tangible examples rather than technical ESG jargon. This requires advisers to be well-trained and for there to be regular training programmes.

If you speak in the language of the customers, then sustainability is understood.

Daniel Wild J. Safra Sarasin

Challenges and opportunities

The industry is facing several complex challenges:

• High regulatory pressure tying up resources and limiting innovation
• International frameworks are often difficult to navigate
• NGOs and rating agencies have high expectations, but rarely acknowledge progress
• Politicised debates and anti-ESG sentiment are shaping public perception

At the same time, sustainability also presents strategic opportunities:

• Meeting evolving client expectations
• Strengthening client relationships and reducing risk
• Accessing new markets
• Enhancing reputation as a responsible institution

Sustainability strategies in practice

Bank strategies range from ambitious net-zero commitments to fulfilling minimum regulatory requirements. Success depends on strong support from the board of directors and executive leadership. A commitment to sustainability must be embedded throughout the organisation, with expertise developed in all departments.

Sustainable investment and lending products

Investments:

• The main area of impact for sustainability in most banks
• Many institutions only offer ESG-related investments, though some apply exclusion criteria only
• More ambitious approaches include initiatives such as J. Safra Sarasin’s Climate Pledge, which involves reducing CO₂ emissions by 7% annually across funds, in line with the European Climate Benchmark
• Other measures include proxy voting, engagement strategies, SDG-based products and thematic funds that support a climate-neutral economy

Lending:

• Less diversity in innovation, with similar products across banks
• Economically challenging, as clients often expect preferential terms for green loans
• Innovative approaches include the financing of green mortgages through green bonds

Sustainability has arrived in the breadth of the market and is increasingly developing from a niche topic to a core factor.

Florian Tresch BLKB

Outlook: Consolidation and cultural shift

Recent years have seen a shift in focus from the hype surrounding ESG to a more pragmatic and impact-orientated approach to sustainability. The key will be to shift sustainability from a centralised function to a company-wide culture. This requires developing a range of capabilities, adapting internal processes and making impact measurable.

Conclusion

The Swiss financial sector is in a critical phase of transition. Although sustainability is well established, definitions and implementation vary widely. The focus is shifting from symbolic gestures to clarity, systems thinking and demonstrable impact.
While banks increasingly see themselves as active drivers of a sustainable economy, they must also navigate the tension between customer expectations, regulatory requirements, and commercial viability.

Interviews and article by Janine Hofer-Wittwer.