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Switzerland is at the forefront of this lofty new discipline: the alpine nation wants to hit its target of reducing CO2 emissions as it has done until now – by buying carbon credits abroad. That will cost nearly $2 billion, according to WWF estimates. It's still cheaper than rolling out effective measures at home.

The UN-certified emission reductions inevitably leads not to an actual reduction of the CO2 emissions, but is a mathematical bet on how much in greenhouse gases aren't released into the atmosphere in the future. The method has rightly been criticized for its lack of effectiveness.

Meanwhile, the financial industry has taken to climate change awareness and sustainability like a duck to water since the Paris conference. ESG, or environment, social, and governance, SRI, or social responsibility investment, green bonds, impact investing: what elicited little interest from most bankers before has stormed into the hottest trend in finance which no firm can afford to ignore. 

«Enter banks to fill the funding gap – and to capture a business opportunity»

The reason is obvious: in Paris, delegates also agreed the so-called social development goals, or  SDGs, which attempt to tackle global issues such as poverty, income inequality, and hunger in 17 points. An estimated $3 trillion to $7 trillion would be needed annually to do so – an impossible task considering the hopelessly indebted state of many of the countries in the agreement.

Enter banks to fill the funding gap – and to capture a business opportunity. J.P.  Morgan estimates that finance will earn $667 billion in the next ten years with impact investments – or those which look to generate a measurable social or environmental benefit besides a financial return. Against this backdrop, who is surprised to see a fringe area of finance hit the banking mainstream?

«We simply see a huge opportunity to sell old products with a new label»

No wonder the output of these investment products has surged in recent years: «sustainability» is part of the mission statement of any bank, and no investor conference is complete without the topic.

What finance is glossing over is its acute credibility issue: countless providers are simply riding the wave, or «greenwashing». Their products carry the sustainable brand, but in reality are anything but. Or as one finance specialist at a major Swiss bank recently told me: «Sustainability is a lifeline for banks. We simply see a huge opportunity to sell old products with a new label».

«The conflict lays bare the principle of opportunism that banks have long followed»

It doesn't take a huge leap of logic to conclude that banks are simply slapping impact and sustainable labels on their products to boost their profits. A glimpse at the energy sector bears this out: in 2017, global investment in renewable energy sank 7 percent to $300 billion, according to International Energy Agency's «World Energy Investment 2018» report. By contrast, investments in oil and gas climbed 4 percent to $450 billion, and $80 billion flowed into coal mining.

This shows that the the march towards a truly sustainable world view by banks like UBS and Credit Suisse is slow, and that climate change interests are frequently subordinated to simple financing requirements.

The conflict lays bare the principle of opportunism that banks have long followed: where return is to be had, banks will pursue it. At least the finance industry's most recent opportunism coincides with a meaningful role in society. Those who invest sustainably can effect change – and perhaps halt climate change.

Peter Hody is editor-in-chief of finews.ch. He has held several managerial positions at «Cash» and «Stocks», Swiss financial news outlets. Previously, he was a reporter at Associated Press and RTL/ProSieben. Hody studied history and acquired an MBA in Media Management at the Hamburg Media School.

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