Swiss banks finding loopholes to fund fossil fuel activity, says report

Study deems Swiss financial companies ‘complicit’ in funding fossil fuel growth, with UBS likely to become a European giant in the area following its acquisition of Credit Suisse.

The Swiss finance industry has “not got the message” from the Paris Climate Agreement, a new report has found, while the recent acquisition of Credit Suisse may make the fossil fuel funding activities of UBS even bigger.

The report, “Swiss finance complicit in fossil fuel expansion”, said UBS, the previously separate Credit Suisse, Swiss Life Asset Managers, insurer Zurich and private bank Pictet lack robust climate policies and have continued supporting the fossil fuel industry through “major loopholes and weaknesses”.

Written before the acquisition, the report was co-authored by Reclaim Finance, BreakFree Switzerland, Greenpeace Switzerland, Alliance Climatique Suisse, Campax, Fossil Free and Grève du Climat.

It said that between April 2021 and August 2022, UBS and Credit Suisse provided at least $8bn in loans and underwriting to companies developing new coal projects and new oil and gas supply and midstream projects. Their asset management branches held at least $19bn of investments in these companies, as of September 2022.  

The problem of latent fossil fuel financing will only become more pressing now that UBS has acquired Credit Suisse, said the report: “With UBS agreeing to take over Credit Suisse, a new ‘European fossil fuel financing giant’ looks likely to emerge. By buying Credit Suisse, UBS took over $6bn of banking deals, including those with Qatar Energy and ConocoPhillips.” Meanwhile, UBS’s exposure to fossil fuel developers will have increased by $8bn following the acquisition of Credit Suisse.

Inconsistent behaviour

“Swiss financial institutions are still lacking policies that guarantee the end of their direct and indirect financial services to new coal projects” which flies in the face of climate recommendations issued by the UN’s Intergovernmental Panel on Climate Change and the International Energy Agency, according to the report.

It highlighted inconsistencies in the financial institutions’ shareholder activism – including occasions where Pictet, UBS Asset Management and Credit Suisse voted against Glencore’s management in 2022, yet continued to finance the Swiss commodity trader and miner.

UBS, including its asset management arm, and Pictet and Swiss Life Asset Managers use only one criteria to restrict support for the coal sector, which is based on the share of revenues of the company that comes from coal, the report noted. “This approach, based on the relative coal exposure of companies, does not provide any guarantee that all the biggest coal players are covered.”

Only Credit Suisse has adopted a coal policy with specific corporate financing restrictions for companies with coal expansion plans.

A Swiss Life spokesperson told Sustainable Views: “As the economy still majorly depends on fossil fuels, the transition progress might slow down to some extent, since some carbon-intensive fuels are being reactivated.” Nonetheless, its “efforts to integrate environmental, social and governance factors into the investment practices have continued to advance in the past year”.

Meanwhile, a spokesperson for Zurich said its sustainability strategy is “to take a long-term view and take actions where we can have the biggest impact, namely through our influence as an insurer and investor to support customers and investee companies in their transition”.

A UBS spokesperson said the bank has a “stringent” sustainability and climate risk policy, and that “in line with its commitment to net zero, by 2030, UBS aims to reduce absolute emissions from loans to fossil companies by 71 per cent compared to 2020 and is on track to achieve this target”.

Credit Suisse and Pictet did not immediately respond to requests for comment.

Trio of recommendations

The report recommended the following action for these titans of Swiss finance: stop supporting coal; withdraw support from companies expanding oil and gas production; and adopt robust engagement policies.

“UBS is now one of Europe’s biggest banks and asset managers, and one of the biggest global supporters of fossil fuel development,” said Lara Cuvelier, sustainable investments campaigner at Reclaim Finance. “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,” she added.

Together, UBS/Credit Suisse, Swiss Life AM, Zurich and Pictet account for almost $2tn in banking assets and $3.6tn of assets under management, according to S&P Global and the Thinking Ahead Institute.

This article was updated on March 28 to include UBS’s comments.