Overview

With the publication of Circular 2026/1 (December 2024), FINMA has set a new regulatory milestone for Swiss banks and insurers. More than 3,500 firms must now move beyond disclosure to actively manage nature-related financial risks, including biodiversity loss, ecosystem degradation, and climate transition exposures.

The circular establishes binding supervisory expectations, embedding these risks into governance, scenario analysis, stress testing, and core risk management.

Aligned with international standards, it aims for global comparability, while presenting challenges in data and implementation. Institutions that act early will not only ensure compliance but also strengthen resilience and gain a competitive edge.

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Who does it apply to?

Mandatory

• Banks: Includes universal, cantonal, and private banks.
• Insurance Companies: Encompasses life, non-life, and reinsurance providers.

Recommended

• Independent Asset Managers (IAMs): Fragmented sector; many are SMEs undergoing licensing processes.
• Portfolio Managers & Trustees: As of end-2023, licenses granted under FinIA.
• Securities Firms: Includes dealers, market makers, and other securities entities.
• Fintech Companies: Active as of end-2023; includes various fintech business models.
• DLT/Blockchain Companies: Operating in Switzerland and Liechtenstein as of 2023.

Timeline

The circular applies to all Swiss banks and insurance companies, with a phased implementation:

• Category 1–2 institutions: Climate-related risk integration by January 2026
• Category 3–5 institutions: Compliance from January 2027.
• Full scope (climate and other nature-related risks): Required for all institutions by January 2028.

Core obligations

• Establishing governance structures with clear roles and responsibilities for
  nature-related risk oversight.
• Conducting materiality assessments using qualitative scenario analysis, with
  Category 3 institutions also applying quantitative approaches for higher-risk
  portfolios.
• Embedding material risks into existing risk categories (credit, market, insurance)
  and integrating them into stress-testing frameworks (for larger institutions).
• Updating control processes, indicators, and monitoring to ensure alignment
  with defined risk tolerance.
• Instituting sector-specific provisions for banks and insurers to ensure resilience
  to extreme events and ecosystem-related disruptions.

Alignment with International Regulatory Trends

Circular2026/1 is part of a broader global shift from disclosure-based approaches to forward-looking, risk-based supervision.Its design reflects similarities with:

• EBA guidelines on ESG risk management,
• UK PRA consultation papers on climate risks, and
• International frameworks such as ISSB, TCFD and TNFD.

All share a common architecture: governance, strategy, risk management, and metrics/targets. By referencing these frameworks, FINMA ensures Swiss institutions can build synergies between local compliance and global reporting obligations, enabling comparability and interoperability across markets.