1. Nature Finance: The financing needs for Switzerland in its nature transition, 2025
In line with the Kunming-Montreal Global Biodiversity Framework (GBF), Switzerland has committed to halting biodiversity loss by 2030 and beyond and to restoring nature. However, achieving these goals will require significant financial investment. In order to provide not only qualitative but also quantitative information on the scale of this necessary expenditure and its sources of financing for the first time, the Boston Consulting Group (BCG) has conducted a study entitled “Nature Finance: The financing needs for Switzerland in its nature transition” on behalf of the Swiss Bankers Association (SBA). This study provides an initial quantitative basis for cooperation with politicians, financial institutions and other stakeholders.
Additional investment in water infrastructure and regenerative agriculture required
The study concludes that the transition to a nature-based economy in Switzerland will require annual investments of CHF 5.3 billion by 2050 – an increase of CHF 2.1 billion per year compared with current spending. The majority of these funds (85 %) are likely to come from public sources due to the nature of the assets concerned and the limited profitability of many biodiversity projects.
Role of Swiss banks supportive but limited
Swiss banks are beginning to integrate nature-related risks and opportunities into their sustainability strategies. Although they are not heavily exposed to nature-related financial risks due to Switzerland’s strong infrastructure and solid insurance system, they can play a supportive role by offering sustainable financial products such as green and sustainability-linked loans and bonds and by focusing on financing sustainable supply chains. However, their influence is limited, as key sectors are predominantly publicly owned and many nature projects generate little commercial revenue.
Unlocking private capital: blended finance and partnerships
To close the financing gap, private capital must be mobilised. To do so, several obstacles must be overcome, including the lack of investable projects, inconsistent metrics and data, and the typically low financial returns of nature investments.
Blended finance – i.e. the combination of public and private funds using instruments such as concessional loans or first-loss capital – can help make projects less risky and attract private investors. In addition, public-private partnerships and co-financing models for public assets can improve the economic viability of nature-related investments.
2. Climate Finance: Mobilising private capital via blended finance, 2024
Climate protection requires capital – and new ways of financing it
Preventing climate change is expensive. According to the Glasgow Financial Alliance for Net Zero (GFANZ), around 3.2 billion US dollars must be invested annually to effectively halt global warming. One thing is clear: this enormous sum cannot be raised without mobilising private funds. The private financial sector has the necessary resources. However, private investors only commit to a project if it is considered worthy of investment – in other words, if it promises an appropriate return for a reasonable level of risk. A large proportion of the necessary investment relates to infrastructure projects in emerging and developing countries, particularly in the G7 countries and China. However, many private investors currently consider these projects too risky or insufficiently attractive.
Blended finance – a solution?
This is where the concept of blended finance comes in: by combining public and private capital in a targeted manner, risks can be mitigated and projects structured in such a way that they become attractive to private investors. Ideally, this can mobilise many times more private capital – without losing sight of the impact of the investment or the return on investment. However, the potential of blended finance remains largely untapped. Investments to date have been too small, often limited to individual projects and hardly scalable. Their impact on climate protection is therefore limited.
To change this, new structures are needed: scalable platforms that map the entire financing cycle – from capital provision and project development to the repayment of funds. Development banks and other financial institutions have a central role to play here. They must be geared towards effectively supporting these platforms and helping to create real leverage. Only if private capital can be mobilised on a large scale for climate protection can the financing gap be closed and global warming effectively limited.
3. Sustainable Finance: Investment and financing needed for Switzerland to reach net zero by 2050, 2021
The transition of the Swiss economy to net zero by 2050 poses a number of challenges. However, financing is not the biggest one: although the investment required is substantial, it is feasible from today’s perspective.
Significant investments are on the horizon
Switzerland’s climate transition will require total investments of CHF 387.2 billion over the next 30 years, or an average of CHF 12.9 billion per year. This corresponds to around 2 per cent of Switzerland’s annual gross domestic product. Investments on this scale will enable the necessary reduction in greenhouse gas emissions in the ten sectors of the Swiss economy with the highest emissions. A large proportion of this will be accounted for by the light road transport, buildings and heavy road transport sectors.
Financing by Swiss banks
Over 90 per cent of the investment required can be financed by banks through their conventional offerings: in addition to bank loans and mortgages amounting to CHF 10.7 billion (83 per cent of the annual investment requirement), a further CHF 1.0 billion (8 per cent) could be financed by the Swiss capital market. At current volumes, the bank loans required for the climate transition would account for around 10.8 per cent of the annual mortgages and corporate loans granted by Swiss banks. The capital market financing of around CHF 1.0 billion required for the climate transition would account for 1.6 per cent of annual bond issues on the Swiss stock exchange.
Implementation as a joint challenge for the state, investors and the financial centre
The SBA is convinced that the Swiss financial center can and will make an important contribution to the ongoing development of the Swiss economy towards greater sustainability and thus also to achieving Switzerland’s net-zero target by 2050 through financing. However, implementing the climate transition is not a task that the financial center can tackle alone, but rather a joint effort: the government is called upon to create reliable framework conditions and incentives so that the economy and citizens invest in appropriate measures.