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Greening the Swiss National Bank’s Portfolio

Author

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  • Rüdiger Fahlenbrach
  • Eric Jondeau

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. (JEL E58, G11)

Suggested Citation

  • Rüdiger Fahlenbrach & Eric Jondeau, 2023. "Greening the Swiss National Bank’s Portfolio," The Review of Corporate Finance Studies, Society for Financial Studies, vol. 12(4), pages 792-833.
    • Handle: RePEc:oup:rcorpf:v:12:y:2023:i:4:p:792-833.
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    File URL: http://hdl.handle.net/10.1093/rcfs/cfad011
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    More about this item

    JEL classification:

    • E58 - Macroeconomics and Monetary Economics - - Monetary Policy, Central Banking, and the Supply of Money and Credit - - - Central Banks and Their Policies
    • G11 - Financial Economics - - General Financial Markets - - - Portfolio Choice; Investment Decisions

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