Greening the Swiss National Bank's Portfolio

52 Pages Posted: 19 Aug 2021 Last revised: 27 Apr 2023

See all articles by Rüdiger Fahlenbrach

Rüdiger Fahlenbrach

École Polytechnique Fédérale de Lausanne; Swiss Finance Institute; European Corporate Governance Institute (ECGI)

Eric Jondeau

University of Lausanne - Faculty of Business and Economics (HEC Lausanne); Swiss Finance Institute; Swiss Finance Institute

Date Written: August 16, 2021

Abstract

Central banks are increasingly concerned about climate-related risks and want to ensure that the financial system is resilient to them. As they integrate these risks into financial stability monitoring, they also discuss how to apply environmental criteria to their own policy portfolio management, without compromising their policy mandate. We describe different strategies and assess their relevance for central banks, using the Swiss National Bank's (SNB) equity portfolio as a laboratory. We develop a carbon-conscious screening approach that is likely consistent with its policy mandate. The approach reduces the portfolio's carbon footprint by 20%, with little impact on diversification or performance.

Keywords: Central bank policy portfolio, portfolio carbon footprint, decarbonized �nancial investment, Network for Greening the Financial System (NGFS).

JEL Classification: G11

Suggested Citation

Fahlenbrach, Rüdiger and Jondeau, Eric, Greening the Swiss National Bank's Portfolio (August 16, 2021). Swiss Finance Institute Research Paper No. 21-59, Available at SSRN: https://ssrn.com/abstract=3906654 or http://dx.doi.org/10.2139/ssrn.3906654

Rüdiger Fahlenbrach

École Polytechnique Fédérale de Lausanne ( email )

Quartier UNIL-Dorigny
Extranef 211
1015 Lausanne, CH-1015
Switzerland
++41-21-693-0098 (Phone)
++41-21-693-3010 (Fax)

HOME PAGE: http://https://www.epfl.ch/labs/sfi-rf/

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

European Corporate Governance Institute (ECGI) ( email )

c/o the Royal Academies of Belgium
Rue Ducale 1 Hertogsstraat
1000 Brussels
Belgium

Eric Jondeau (Contact Author)

University of Lausanne - Faculty of Business and Economics (HEC Lausanne) ( email )

Extranef 232
Lausanne, 1012
Switzerland
+41 21 692 33 49 (Phone)

HOME PAGE: http://people.unil.ch/ericjondeau/

Swiss Finance Institute ( email )

40, Boulevard du Pont-d'Arve
40, Bd du Pont-d'Arve
1211 Geneva 4, CH-6900
Switzerland
+41 21 692 33 49 (Phone)

Swiss Finance Institute

c/o University of Geneva
40, Bd du Pont-d'Arve
CH-1211 Geneva 4
Switzerland

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