<h4>FINMA increases focus on climate-related risks</h4>
<p>On May 31, 2021, the Swiss Financial Market Supervisory Authority FINMA (<strong>FINMA</strong>) announced that it has clarified its supervisory practice with respect to the disclosure of climate-related financial risks by financial institutions. Specifically, FINMA has amended two circulars applicable to banks and insurance companies, <em>i.e.</em>, its Circular 2016/01 on the public disclosure of banks and its Circular 2016/02 on the public disclosure of insurance companies, to include additional disclosure requirements tailored to address climate-related financial risks. These amendments are the result of a public consultation on the disclosure of climate-related financial risks initiated by FINMA in November 2020, where various interested parties, such as industry representatives and environmental protection organizations, were invited to provide input on FINMA&#8217;s proposals.</p>
<p>The revised circulars will enter into force on July 1, 2021. Consequently, the disclosure of climate-related financial risks will be required for the first time in the annual reports for the financial year 2021, published in 2022.</p>
<p>The introduction of these disclosure obligations comes on the wings of a growing recognition that threats posed by climate change have wide-ranging impacts not only on environmental, human and societal systems but also on the structure and functioning of the economy and financial system. In particular, climate change and climate-related risks are a source of financial risk, which can have an impact on financial institutions as well as on financial stability. As such, FINMA&#8217;s updated supervisory practice dovetails with the disclosure requirements of the Task Force on Climate-related Financial Disclosures (<strong>TCFD</strong>) established by the Financial Stability Board (FSB).</p>
<p>This effort forms part of FINMA&#8217;s larger strategic goal of contributing to the sustainable development of Switzerland as a financial center (for more information, see FINMA&#8217;s dossier on green finance, available <a href="https://www.finma.ch/en/documentation/dossier/dossier-green-finance" target="_blank" rel="noopener">here</a>). In this vein, FINMA has also stressed its commitment to preventing the public from being misled about the sustainability or economically friendly nature of certain financial products or services («<em>green washing</em>»).</p>
<h4>New disclosure requirements initially only apply to large banks and insurance companies</h4>
<p>Initially the additional disclosure requirements will only apply to banks and insurance companies that fall within the supervisory categories 1 and 2, <em>i.e.</em>, globally systemically important banks (G-SIBs), domestically systemically important banks (D-SIBs) and insurance companies with total assets of over CHF 1 billion. The disclosure requirements for climate-related financial risks will therefore directly affect only a handful of financial institutions.</p>
<p>Further, as FINMA itself has pointed out, the majority of the financial institutions in scope have already voluntarily committed to disclose their climate-related financial risks in compliance with the TCFD recommendations. The current impact of the new FINMA disclosure requirements is therefore limited to creating a more uniform framework for the disclosure of climate-related financial risks with the goal of fostering increased comparability of the disclosed information across different financial institutions.</p>
<p>However, FINMA has indicated that it may extend the scope of application to additional financial institutions in the future, as it continues to evaluate the situation based on its experiences with the disclosure of climate-related financial risks going forward.</p>
<h4>No uniform definition of «climate risks»</h4>
<p>FINMA does not propose a legal definition of what exactly constitutes a climate-related financial risk. In its explanatory report, FINMA instead follows the approach set out by the Basel Committee on Banking Supervision, the International Association of Insurance Supervisors and the TCFD by setting out two principle categories of climate-related financial risks:</p>
<ul>
<li><em>Physical risks</em>: risks resulting from increased damage and losses from climate-related trends (e.<em>g.</em>, sea level rise) and events (<em>e.g.</em>, natural catastrophes).</li>
<li><em>Transition risks</em>: risks arising from disruptions and shifts that indirectly affect financial institutions, for instance due to the introduction of climate policy measures with a transition to a low-carbon economy (e.<em>g.</em>, CO<sub>2</sub> levies, emissions or energy efficiency standards or restrictions on «unsustainable» business sectors, such as coal or oil), shifting investor and consumer sentiment or disruptive technological breakthroughs.</li>
</ul>
<p>On top of that, insurance companies specifically are exposed to liability risks, another climate-related risk category promulgated by the International Association of Insurance Supervisors. <em>Liability risks</em> refer to the «risk of climate-related claims under liability policies, as well as direct actions against insurers, for failing to manage climate risks».</p>
<p>FINMA also clarifies that climate-related risks do not <em>per se</em> constitute a new category of risk, but are a risk driver that can be adequately and efficiently captured and managed within the traditional risk categories, <em>e.g.</em>, credit, market, insurance or operational risk.</p>
<h4>Only material climate-related financial risks are subject to disclosure</h4>
<p>Further, the general rule that only relevant, material risks have to be disclosed in principle also applies to the disclosure of climate-related financial risks. However, in deviation from the conventional disclosure requirements, the financial institution&#8217;s criteria and valuation methods used to assess the materiality of climate-related financial risks must be disclosed in any case.</p>
<p>This means that even if a financial institution concludes that it is not subject to any material climate-related financial risks and therefore should decide that it is not required to disclose such risks, it still has to disclose information on the criteria and valuation methods underpinning this decision.</p>
<h4>Principle-based and proportional approach allows for tailored solutions</h4>
<p>The disclosure of the climate-related financial risks are made as part of the relevant institutions&#8217; annual reporting. Separately published reports can be included by reference to fully or partially fulfil the disclosure requirements.</p>
<p>The additional requirements set out in FINMA circulars 2016/01 for the public disclosure of banks (in annex 5) and 20016/02 for the public disclosure of insurance companies (in section IV) define only the broader principles for the disclosure of climate-related financial risks. As such, FINMA allows the financial institutions in scope to retain sufficient flexibility to adjust their disclosure to their respective size, complexity, structure, business activities and risks. Financial institutions are largely free to determine the level of detail of their disclosure of climate-related financial risks and to decide how and where such disclosure is integrated into their annual reporting (within the confines of the applicable regulatory disclosure framework).</p>
<p>At a minimum, the respective disclosure has to contain the following information:</p>
<ul>
<li><em>Governance</em>: description of how the board of directors exercises its overall supervision with respect to the identification, assessment and monitoring of climate-related financial risks, including information on the relevant governing bodies, responsibilities and reporting lines within the financial institution and the extent to which climate-related financial risks are addressed;</li>
<li><em>Strategy</em>: Description of the material short-, medium-, and long-term climate-related financial risks identified and their qualitative and quantitative impact on the business strategy, business model, financial planning and risk profile, as well as information on the categorization of climate-related financial risks in the financial institution&#8217;s existing risk categories;</li>
<li><em>Risk management</em>: Description of the risk management process for identifying, assessing and addressing climate-related financial risks and how this process is integrated in the larger risk management structures and processes.</li>
<li><em>Metrics</em>: Quantitative information (key figures and targets) on climate-related financial risks and the methodology applied for their identification.</li>
</ul>
<p>In its explanatory report of May 6, 2021 FINMA provides some additional color on its expectation for the content of the disclosure. While largely identical for banks and insurance companies, some details vary.</p>
<h4>Existing disclosure by financial institutions varies</h4>
<p>While most large Swiss financial institutions already provide for reporting on climate-related financial risks, the level of detail and presentation varies wildly. Some financial institutions present the relevant information in the categories set out in the revised FINMA circulars (governance, strategy, risk management and metrics), while others refer to climate-related financial risks within the larger sustainability context. In particular, insurance companies in general already provide information on climate-related financial risks that far surpasses the minimum requirements set out by FINMA, many of them publishing separate reports that specifically tackle this topic.</p>
<p>Especially financial institutions that already adhere to the TCFD recommendations will not have to amend their disclosure of climate-related financial risks in the first instance due to the introduction of the new FINMA disclosure requirements. However, it remains to be seen if and when a more uniform industry standard on the disclosure of climate-related financial risks emerges.</p>


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FINMA Introduces Disclosure Requirements for Climate Risks

<h3>Episode 1: «Inbound Cross-border Fund Offerings»</h3>
<p>In this episode <a href="https://www.homburger.ch/en/team/jurg-frick/">Jürg Frick</a> and <a href="https://www.homburger.ch/en/team/vanessa-isler/">Vanessa Isler</a> discuss what foreign funds and their distributors have to keep in mind when they are looking to approach Swiss investors, with a special focus on when a foreign fund or distributor may be providing a financial service under FinSA.</p>


<h3>Episode 2: «Ansässigkeit»</h3>
<p>The FinSA newly regulates the cross-border provision of financial services in Switzerland. When is a foreign financial services provider considered to be based in Switzerland? Under which circumstances do its client advisors have to be registered in Switzerland? And what sanctions apply in case of non-compliance with these rules?</p>
<p>In this episode, <a href="https://www.homburger.ch/en/team/benedikt-maurenbrecher/">Benedikt Maurenbrecher</a> and <a href="https://www.homburger.ch/en/team/stefan-bindschedler/">Stefan Bindschedler</a> answer these and other questions.</p>


<h3>Episode 3: «Reverse Solicitation»</h3>
<p>Financial services rendered by foreign financial services providers at a Swiss client’s own exclusive initiative are not subject to the Financial Services Act («reverse solicitation»). But what exactly are the conditions for the financial services provider to be able to rely on the exemption? And how does reverse solicitation play out within the context of the offering of financial instruments?</p>
<p>Join <a href="https://www.homburger.ch/en/team/stefan-kramer/">Stefan Kramer</a> and <a href="https://www.homburger.ch/en/team/manuel-baschung/">Manuel Baschung</a> for a primer on these and other questions.</p>


<h3>Episode 4: «On Tour with Investors»</h3>
<p>What has to be done – or avoided – when going on a road show to meet potential or existing shareholders or other investors in Switzerland? <a href="https://www.homburger.ch/en/team/david-borer/">David Bore</a>r and <a href="https://www.homburger.ch/en/team/benjamin-leisinger/">Benjamin Leisinger</a> will explain the «dos &amp; don&#8217;ts» when it comes to road shows under the Financial Services Act, in particular as to the concepts of «advertising», the «provision of financial services» and an «offer».</p>


<h3>Episode 5: «Robo Advisors in Switzerland – Regulatory Framework»</h3>
<p>Robo Advisors increasingly gain traction in Switzerland and have been able to record a substantial growth in their assets under management in recent years.</p>
<p>In view of these developments, <a href="https://www.homburger.ch/en/team/hansjurg-appenzeller/">Hansjürg Appenzeller</a> and <a href="https://www.homburger.ch/en/team/alexander-wherlock/">Alexander Wherlock</a> will be giving a comprehensive overview of the regulatory requirements applicable to Robo Advisors conducting business in Switzerland.</p>


<h3>Episode 6: «Retrozessionen»</h3>
<p>Is FinSA a «game changer» for retrocessions? What is the role of general terms and conditions? And can existing waivers be used going forward? In this episode, <a href="https://www.homburger.ch/en/team/katrin-ivell/">Katrin Ivell</a> and <a href="https://www.homburger.ch/en/team/fabrice-eckert/">Fabrice Eckert</a> provide answers to these and other questions.</p>


<h3>&gt; <a href="https://www.homburger.ch/en/financial-market-regulation-hub/">Visit our Hub with a compilation of our publications and more on financial market regulation.</a></h3>


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Update<br>FIDLEG Mini Series<br>Episodes 1–6

Financing and Investment Products

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<p>Homburger acted as counsel to DZ BANK AG Deutsche Zentral-Genossenschaftsbank, Frankfurt am Main, as arranger, agent, security agent and lender in connection with certain financing aspects of the acquisition of zvoove Switzerland AG (formerly BackOffice AG) by zvoove Group GmbH. Based in Basel, Switzerland, and founded in 1987, zvoove Switzerland AG supports temporary staffing companies with one of the leading industry solutions in Switzerland.</p>
<p>Homburger advised DZ BANK AG with regard to all Swiss legal aspects of the financing transaction.</p>
<p>The Homburger team was led by partner Jürg Frick (Financing and Investment Products) and included associates Stefan Bindschedler and Pierina Janett-Seiler (both Financing and Investment Products) as well as partner Stefan Oesterhelt (Tax).</p>


Homburger advised DZ BANK AG in connection with financing aspects of the acquisition of zvoove Switzerland AG by zvoove Group GmbH

Compliance

Financial Market Regulation

Capital Markets

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Technology and Digital Economy

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<p>The new legislation still poses many challenges. Experts from our team debate «hot topics» in our FIDLEG Mini Series and present perspectives. Whether robo advisors, road shows, retros or advertising, we promise interesting discussions.</p>
<p><a href="https://www.homburger.ch/en/insights/update-fidleg-mini-series">&gt; FIDLEG Mini Series</a></p>
<p><a href="https://www.homburger.ch/en/financial-market-regulation-hub/">&gt; Visit our Hub with a compilation of our publications and more on financial market regulation.</a></p>
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Financial Services Act - FinSA (FIDLEG) - Curse or Blessing?

Corporate / M&A

Competition

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<p>On July 6, 2021, Platinum Equity announced that it has signed a definitive agreement to acquire Solenis, a leading global producer of specialty chemicals used in water-intensive industries, from Clayton, Dubilier &amp; Rice and BASF in a transaction that implies an enterprise value for Solenis of USD 5.25 bn.</p>
<p>As part of the transaction, Solenis is expected to merge with Sigura Water, an existing Platinum Equity portfolio company the firm acquired in 2019, for a total combined transaction value of approximately USD 6.5 bn. The combined company is expected to generate approximately USD 3.5 bn of revenue and serve a diverse range of customers around the world in consumer, industrial and pool water treatment markets.</p>
<p>Homburger advises Platinum Equity on the Swiss legal and tax aspects of the transaction. The Homburger team includes partners Stefan Kramer (Financing and Investment Products), Andreas Müller (Corporate / M&amp;A), Stefan Oesterhelt (Tax) and Richard Stäuber (Competition; Regulatory), associates Margrit Marti (Corporate / M&amp;A) and Yves Bianchi (Competition; Regulatory), and junior associates Matthias Müller (Corporate / M&amp;A) and Yannick Rüfenacht (Financing and Investment Products).</p>


Homburger advises Platinum Equity in its Acquisition of Solenis

<p>We have longstanding experience with international financing transactions, including syndicated lending and acquisition financing, asset financing, export financing, real estate finance and financial restructurings financing. Our core competencies include:</p>
<ul>
<li>Syndicated, secured and unsecured loan financing</li>
<li>Acquisition and export financings as well as financing of real estate transactions</li>
<li>Asset financing, including covered bonds and securitizations</li>
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<p>We lead the way when it comes to developing and documenting investment products, including complex and customized structured products. Our core competencies include:</p>
<ul>
<li>Developing and documenting of structured products</li>
<li>Advising Swiss and international private equity, hedge fund, and other fund managers on the structuring and distribution of funds</li>
<li>Developing and obtaining all authorizations for innovative investment products</li>
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Financing and Investment Products

Financing Transactions

Investment Products

Main Contacts

FINMA Introduces Disclosure Requirements for Climate Risks

Update
FIDLEG Mini Series
Episodes 1–6

Homburger advised DZ BANK AG in connection with financing aspects of the acquisition of zvoove Switzerland AG by zvoove Group GmbH

Financial Services Act - FinSA (FIDLEG) - Curse or Blessing?

Homburger advises Platinum Equity in its Acquisition of Solenis

Position Paper regarding selected Aspects of the Financial Services Act (FinSA)

Acquisition Finance 2021: Switzerland

On tour with investors – dos and don'ts for roadshows in Switzerland

Financing and Investment Products

Financing Transactions

Investment Products

Main Contacts

FINMA Introduces Disclosure Requirements for Climate Risks

UpdateFIDLEG Mini SeriesEpisodes 1–6

Homburger advised DZ BANK AG in connection with financing aspects of the acquisition of zvoove Switzerland AG by zvoove Group GmbH

Financial Services Act - FinSA (FIDLEG) - Curse or Blessing?

Homburger advises Platinum Equity in its Acquisition of Solenis

Position Paper regarding selected Aspects of the Financial Services Act (FinSA)

Acquisition Finance 2021: Switzerland

On tour with investors – dos and don'ts for roadshows in Switzerland

Update
FIDLEG Mini Series
Episodes 1–6