25 November 2025

Climate-related financial risks also become a greenwashing risk

  • Articles
  • Legal
  • Banking / Insurance
  • Governance / ESG

The FINMA Risk Monitor 2025 published on November 17, 2025 shows that greenwash-ing is already a risk for banks and insurers and will become an even greater risk in the future.

  • Adrian Peyer

    Legal Partner

Climate risks in the Swiss financial system are no longer an abstract topic for the future. The report on climate-related financial risks in the appendix to the FINMA Risk Monitor 2025 clearly shows how strongly physical and transition risks are now affecting balance sheets, credit portfolios, and underwriting – and why greenwashing allegations are becoming a key supervisory and business risk.

Climate risks have a direct impact on the business model

Banks and insurers are affected by climate risks in many ways – through loans, capital investments, mortgages, insurance coverage, and supply chains. Over 30% of banks' corporate loans and bonds are attributable to "climate-relevant sectors" such as real estate, energy, transportation, and the fossil fuel industry. For insurers, the corresponding share is around 9% of their invested assets.

This exposure coincides with a risk situation that, according to the institutions' assessments, will increase significantly in the coming years – both in terms of transition risks (political intervention, technological upheavals) and physical risks.

The real flashpoint: reputational and legal risks from greenwashing

Particularly alarming: FINMA clearly shows in its report how strongly greenwashing risks are already affecting financial stability and customer confidence today.

Among banks, 75% say they already have or expect to have legal and reputational risks from greenwashing allegations; among insurers, the figure is 61%.

Greenwashing is therefore no longer seen as a PR problem, but as a risk that is critical from a supervisory perspective and relevant to liability and reputation – comparable to money laundering or sanctions violations.

Why greenwashing risks escalate so quickly

The report shows that many institutions have publicly communicated climate targets and exclusion policies – but often lack measurable implementation internally.

Examples from the FINMA appendix:

  • Only 38% of banks have defined climate-related targets for their asset management business.
  • Certain insurers have climate targets but no timetable for achieving them.
  • Institutions set exposure limits, but only partially measure the actual emission intensity of their portfolios.

In short, there is a gap between stated ambitions and actual implementation – a perfect breeding ground for accusations of greenwashing.

What FINMA expects: The era of "voluntary promises" is over

In Circular 2026/1 "Nature-related financial risks," FINMA specifies the requirements for governance, risk measurement, scenario analysis, disclosure, and internal anchoring of climate-related financial risks – with a staggered entry into force from January 1, 2026.

Areas of focus for supervision:

  • Systematic risk assessment (not just qualitative narratives)
  • Quantitative climate targets and progress tracking
  • Scenario analyses & data quality
  • Consistency between marketing claims and risk positions
  • Demonstrable consideration of climate risks in lending and underwriting

FINMA has already expressed specific expectations to seven institutions – among other things, due to a lack of systematic treatment of physical risks or a lack of quantitative targets.

What institutions must do now to avoid greenwashing risks

Five specific recommendations for action from a regulatory and governance perspective

Priority | Measure | Target effect

  1. Establish consistency between marketing and risk positions | Avoids accusations of greenwashing
  2. Define quantitative climate targets and measurable KPI roadmaps | Meet FINMA expectations
  3. Conduct scenario analyses and exposure screening on a regular basis | Transition to evidence-based risk management
  4. Formally integrate climate risks into credit and underwriting policies | Liability and reputation protection
  5. Link board and management incentives to climate targets | Make the "tone from the top" visible

Conclusion

Climate risks are measurable. Greenwashing is avoidable.

The FINMA report shows that the reputation of the Swiss financial center will not depend on whether banks and insurers have climate-related risks, but on how transparently, consistently, and credibly they deal with them.

Our ESG team is happy to assist you in avoiding greenwashing.

 

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