FINMA, the Swiss Financial Market Supervisory Authority, has released a new circular titled “Nature-related financial risks” that outlines supervisory expectations for banks and insurers regarding climate and nature-related financial risk management. The circular aims to enhance institutional resilience and protect both clients and the Swiss financial sector.
The implementation follows a staged approach, beginning January 1, 2026, with initial focus exclusively on climate-related financial risks. Banks and insurers in supervisory categories 3 to 5 have been granted an additional year, until January 1, 2027, to comply with climate-related provisions. The scope will expand to encompass all nature-related financial risks starting January 1, 2028.
The circular adopts a comprehensive approach, extending beyond climate change to include other potential nature risks. FINMA’s framework aligns with international standards while applying proportionality principles, placing higher demands on larger and more complex institutions.
During the consultation phase, the circular received mixed responses. While there was general support for clarifying supervisory expectations, stakeholders differed on specifics. Industry associations expressed criticism, whereas environmental protection groups, civil society representatives, and academics advocated for even stronger measures. FINMA has incorporated various consultation feedback into the final circular.
The phased implementation timeline acknowledges the varying maturity levels between climate risk and other nature risk topics, as well as institutions’ current preparedness states. This strategic approach aligns with FINMA’s 2025-2028 goals, which emphasize institutional resilience to climate and nature-related financial risks.
FINMA will actively monitor the circular’s implementation to ensure supervised institutions adequately account for these risks in their operations. The supervisory framework represents a significant step in integrating environmental considerations into Swiss financial regulation, reflecting growing awareness of nature-related financial risks in the global financial sector.
The circular’s staged introduction demonstrates a balanced approach, giving institutions adequate time to adapt while maintaining regulatory momentum. It establishes Switzerland’s position in addressing emerging financial risks related to climate change and environmental degradation, while considering the practical challenges of implementation for different-sized institutions.
The press release can be read there.
The circular can be uploaded there.
