New ESG self-regulatory developments in Switzerland

Friday 19 August 2022

Dr François Rayroux
Lenz & Staehelin, Geneva

Liburn Mehmetaj
Lenz & Staehelin, Geneva

Laurence Vogt Scholler
Lenz & Staehelin, Geneva


The purpose of this article is to summarise recent developments in the asset management sector in Switzerland in the field of environmental, social and governance criteria (ESG).

Switzerland enacted, effective on 1 January 2020, an entirely new legislative framework regarding financial services and products as well as the supervision of financial institutions. While ESG aspects were not included in this new regulatory framework, the Swiss Federal Council expressly declared in a Report on Sustainability in the Financial Sector, dated 24 June 2020, that in light of both national and international developments, sustainability in the financial sector was one of its political priorities. It is central to any financial market regulation, namely, to preserve the competitivity of the Swiss financial marketplace and to lead the financial sector to make an effective contribution to sustainability. The purpose of the Swiss government was primarily to align with the highest international standards.

In view of recent developments, especially in the European Union, the Swiss government’s objective is to prevent international disparities as regards ESG regulations, in particular as to the prevention of ‘greenwashing’ and creating the conditions to strengthen the creditability and quality of the Swiss financial market as a whole, and the Swiss asset management and financial products industry in particular on sustainability. In parallel, and despite limited powers and pending the finalisation of the government’s intended ESG framework, the Swiss Financial Market Supervisory Authority (FINMA) has taken certain measures related to ESG on its own initiative, in particular as regards the prevention of greenwashing (FINMA Guidance 05/2021). There is generally strong support from the Swiss financial industry to implement a Swiss ESG framework rapidly. The general view is that Swiss market participants should be in a position to implement international standards, where needed, while preserving certain flexibility to allow local ESG standards in line with Swiss concepts to be adopted by more regional institutions, where appropriate. Before deciding whether a legislative revision or the adoption of mandatory regulation is needed, the Swiss government gave an opportunity to the financial industry to implement a self-regulation in 2022. The initial objective was that such self-regulation in the ESG sector would be seen as sufficient by the Swiss government to avoid, or at least limit, the need for additional mandatory regulation.

In this context, it is interesting to note that, historically, Switzerland relied heavily on self-regulation, allowing the industry to regulate itself. Such self-regulation can be either enforceable through the organisation doing the self-regulation itself (since the rules are binding on its members) or a minimum standard is declared by the regulator (leading to a delegation of law-making powers to the private sector, with enforcement by ordinary regulatory measures by the State regulator). To this effect, the financial industry agreed, in the first instance, to implement a so-called ‘voluntary’ self-regulation which has now been elaborated and published independently both by the Swiss Bankers Association (SBA) and the Swiss Asset Management Association Switzerland (AMAS) with different scopes:

  • the Swiss Bankers’ Association Guidelines for the financial service providers on the integration of ESG-preferences and ESG risks into investment advice and portfolio management, published in June 2022 (the ‘SBA ESG Guidelines’); and
  • the Asset Management Association Switzerland self-regulation regarding transparency and disclosure for sustainability-related collective investments, to be published in September 2022 (the ‘AMAS ESG Guidelines’).

Other industry associations are also expected to shortly publish similar self-regulation documents for their specific industry sector. This holds true for the Swiss Association of Pension Funds (ASIP), which will develop its own ESG self-regulatory standards to be published in Autumn 2022 (the ‘ASIP ESG Guidelines’).

This article will focus in particular on the AMAS ESG Guidelines.

Regulatory nature

The AMAS ESG Guidelines are a so-called ‘free self-regulation’, meaning that FINMA has not, and will not, declare this self-regulation as a minimum standard applicable to regulated entities in a mandatory manner. This is a conscious choice by FINMA and the industry since FINMA lacked a legal basis in order to declare this self-regulation as a mandatory minimum standard.

The AMAS ESG Guidelines intend to set out certain standards that the entities in-scope can, of course, exceed. The self-regulation of AMAS is designed in a ‘principle-based approach’, in line with most regulations under Swiss law. It leaves, therefore, sufficient room to institutions to comply with the AMAS ESG Guidelines in a way that suits the specific requirements and needs of each institution. In practice, local promoters and industry actors are expected to create short and simple rules applicable to them, while larger actors will certainly comply with foreign standards (such as EU law) and prepare, therefore, more complex and dense internal regulations.

Key differences between the SBA and AMAS ESG Guidelines


SBA ESG Guidelines

AMAS ESG Guidelines

Personal scope

Members of the SBA and non-members, adhering on a voluntary basis:

Financial services providers, regardless of their regulatory status

Members of the AMAS or non-members, adhering on a voluntary basis:

Producers of investment funds and managers of collective assets (funds and pension funds)

Material scope

Financial services at point-of-sale (investment advice and portfolio management) according to the Financial Services Act (FinSA)

The sale and purchase of financial instruments (as a type of financial service) is excluded from the scope

Product level: administration and discretionary management of sustainability-related collective assets

The sale and purchase of financial instruments (as a type of financial service) is excluded from the scope

Institutions level: organisational rules

Territorial scope

Both Swiss and foreign financial services providers serving clients in Switzerland and Swiss financial services providers serving clients worldwide (same scope as the FinSA)

Swiss entities: producers or investment managers of Swiss or foreign collective assets (eg, investment funds, pension schemes)

Foreign entities: investment managers of Swiss collective assets (eg, investment funds, pension schemes)

Object of regulation

Considering ESG preferences and risks

Transparency and quality of Swiss sustainability-related collective assets

Type of clients

Retail clients: applicable

Professional clients: applicable, but can be waived

Institutional clients: not applicable

Swiss collective investment schemes

Foreign collective investment schemes

Other Swiss and foreign collective assets (eg, pension funds)

Self-regulation type

Voluntary self-regulation – not recognised by FINMA as a mandatory minimum standard

Voluntary self-regulation – not recognised by FINMA as a mandatory minimum standard

Substituted compliance

EU standards = substituted compliance

Any foreign standard recognised by AMAS = substituted compliance

Entry into force and transitional provisions

Entry into force: 1 January 2023

Training: 1 January 2024

New clients: 1 January 2024

Existing clients: 1 January 2025

Entry into force: 31 March 2023

Fund documents amendments: 30 September 2024

Existing agreements: first amendment for other reasons after 30 September 2024

Private law effect




Internal audit (if any)

Self-declaration to the highest governing body and to AMAS




Core obligations


Client preferences: Assessment and matching


Staff training

Organisation and resources


Delegation rules

Investment strategy




Scope of the AMAS ESG Guidelines

Regulation of ESG aspects in the financial sector is traditionally broken down into three categories:

  1. Institutional level: rules governing the organisation of financial entities;
  2. Product level: information and transparency requirements at the level of the financial product; and
  3. Point-of-sale level: rules governing the sale of the financial products (through a sale/purchase, investment advice, or portfolio management).

The AMAS ESG Guidelines intend to exclusively govern the first two levels (institutional and product levels), excluding point-of-sale requirements. Since the SBA ESG Guidelines govern the third item (point-of-sale) and partially the first level (institutional level, through training obligations), the Swiss self-regulation framework should govern all three levels.

It is, however, important to note that none of the self-regulation obligations apply to the financial service of ‘sale/purchase of financial instruments’ under FinSA (as opposed to investment advice or portfolio management services). Therefore, the distribution of Swiss or foreign funds does not trigger any rules of conduct (eg, information obligations) under the FinSA, the AMAS ESG Guidelines, or the SBA ESG Guidelines, as regards ESG aspects (unless the distributor is subject to the SBA ESG Guidelines and provides ‘point of sale’ investment advice or portfolio management services under the FinSA). Including such obligations for the sale and purchase of financial instruments would require an amendment to the FinSA.

The AMAS ESG Guidelines’ scope comprises mainly the asset management of collective investment schemes, but also the asset management of other collective assets such as pension funds (unless the pension fund clients expressly declare the wish to be subject to the specific ASIP ESG Guidelines).

Since the portfolio management of collective assets consists in a regulated activity in Switzerland, subject to a specific licence (as asset manager of collective assets), the AMAS ESG Guidelines de facto apply only to institutions already prudentially regulated in Switzerland under the Swiss Financial Markets legislation. This includes de minimis asset managers of collective assets, not reaching the relevant thresholds for a licence as asset manager of collective assets, but not so-called ‘small’ portfolio managers (ie, mostly IFAs managing individual portfolios of private clients).

Investment advice mandates, custody, or other types of mandates not consisting of investment management do not fall within the scope of the AMAS ESG Guidelines.

Substituted compliance

The AMAS ESG Guidelines did not intend to provide for a so-called ‘Swiss finish’ (ie, using foreign regulation as a basis and adding Swiss-specific requirements). The AMAS ESG Guidelines include a clause that allows institutions in scope to comply with foreign standards instead of the AMAS ESG Guidelines. In contrast with the SBA ESG Guidelines, the AMAS ESG Guidelines do not limit the type of foreign regulation admissible for such ‘substituted compliance’ to EU regulations but to any recognised foreign regulation. It was a conscious choice of AMAS not to limit substituted compliance to EU laws but also to include other jurisdictions. This concept does not presuppose that the foreign standards are equivalent or comparable. The list of recognised foreign regulatory frameworks are expected to be published on AMAS’ website.

In addition to substituted compliance, the AMAS ESG Guidelines also recognise that a financial institution might comply with the AMAS ESG Guidelines if the client explicitly requires the application of another framework (eg, standards developed by the pension funds industry). This ‘alternative compliance’ allows financial institutions to comply not with two different standards but only with the one chosen by the client. If the client does not select any other standard, the AMAS ESG Guidelines apply by default.

Sustainability reference

The AMAS ESG Guidelines have introduced the new concept of sustainability-related collective assets. Such a link to sustainability is deemed to exist where an asset is managed, designated, or positioned with references to ESG aspects or sustainability.

This concept, although not clearly defined, is similar to the one chosen by FINMA in its Guidance 05/2021, which also included investment funds advertised as ‘green’, ‘sustainable’, ‘ESG’, etc. The sustainability-related concept might also include funds not designated or positioned by the issuer as sustainable but advertised as such, for example, by distributors.

Core obligations

The AMAS ESG Guidelines include mainly organisational duties for asset managers who must ensure that they have the required infrastructure, resources, organisation, and processes (governance, investment, and risk management).

Asset managers shall also provide appropriate training to executives, managers, and other employees entrusted with sustainability-relevant tasks.

Delegation and sub-delegation agreements shall include competencies, responsibilities, accountability, and control rights regarding sustainability matters. Rules about delegation in the AMAS ESG Guidelines are aligned with the delegation requirements under the Financial Institutions Act (FinIA). They require the relevant ESG criteria and requirements to be included in the delegation agreements. In addition, general rules on delegation, risk management, and compliance are to be supplemented in order to include ESG aspects (for new and existing contracts and sub-delegations).

Furthermore, the AMAS ESG Guidelines set out specific rules regarding designing the investment strategy and using sustainability data and metrics. In particular, the proportion of investments that must meet the sustainability requirements must be written in the investment management agreement (or in a document referred to in such agreement). The asset managers must record sustainability metrics relevant to the implementation of the strategy in a verifiable manner.

Regarding third-party providers of sustainability data/tools, the asset manager shall only review the third-party providers’ organisation, the scope of data, and other key aspects which are decisive for the investment process.

The identity of the providers of data and tools must only be disclosed in the investment management agreement (or another document designated in such agreement), but not necessarily in documents available to end-investors or the public (unless the product is a Swiss fund with a focus on sustainability, in which case the fund management company must disclose the data sources in the prospectus or other fund documents).

Additional rules apply to specific approaches such as stewardship, impact investments, or climate-oriented approach.

Interestingly, in line with the Swiss government’s stated policy, following an ESG approach by a simple exclusion only of certain assets is, as such, not sufficient to allow a classification of the approach as having a ‘sustainability focus’ or the product as to be in line with the AMAS ESG Guidelines.

Regarding advertising, asset managers must ensure that funds with a reference to sustainability are advertised consistently with the funds’ legal documents.

The AMAS ESG Guidelines also introduce reporting requirements. Asset managers (or a third party) must inform investors annually by a sustainability report (eg, to be published on a website). Such report shall include the most important sustainability approaches used, describe the approaches, and compare the most important ratings, metrics, or other benchmarks. Regarding impact strategies, the reporting shall include an evaluation of the extent to which the fund has achieved the sustainability objectives.


The AMAS ESG Guidelines are seen as a strong sign of the Swiss financial industry’s commitment, together with the SBA ESG Guidelines, to align itself with the highest international standards regarding ESG, and particularly the fight against greenwashing. It also preserves a certain flexibility to allow the implementation not only of local standards in line with the business models of smaller Swiss market participants, but also allows other more global Swiss financial institutions to implement international standards as applied within the context of their worldwide activities. Whether the proposed strongly principle-based approach of the AMAS and SBA ESG Guidelines will be sufficient remains to be confirmed, not only in light of international developments but also depending on the Swiss government’s satisfaction with the proposed industry self-regulation going forward.