Switzerland is making a bigger foray into impact investing. The government on Wednesday launched a public-private partnership to drive $1bn towards projects with a social and environmental impact in developing countries.
The scheme, named the SDG Swiss Impact Finance Initiative, will seek to raise CHF 100 million Swiss francs by 2030 from public and philanthropic funds, the aim being to encourage mainstream private investors to follow suit.
The foundations of Switzerland’s two biggest banks, UBS and Credit Suisse, and the Swiss Agency for Development and Cooperation (SDC), are participating in the initiative alongside the State Secretariat for Economic Affairs (SECO), which is providing CHF19.5m in financial support.
“It is all about collaboration and joining forces between public, private and philanthropic actors to mobilise more finance for the sustainable development goals,” said Marie-Gabrielle Ineichen-Fleisch, SECO state secretary, who unveiled the initiative at Building Bridges on Tuesday.
Increasing examples of such blended finance schemes and other collaborative financing models have been emerging to help mobilise greater pools of money towards the developing world and initiatives that will generate a positive impact.
The SDGs require additional investments of $2.5 trillion a year in developing countries in areas like healthcare, gender inclusion, water security, and education, according to the UN.
Measures to fight climate change alone are expected to amount to $5 trillion a year, a study released during Cop26 revealed, with developing countries urging wealthy nations and the private sector during the conference to step up to the plate after missing the $100bn a year target promised by 2020.
By mixing public, charitable and private money, the idea is to provide a safety net and attract private institutions to invest in social or environmental projects that they would have otherwise deemed too risky.
Speaking at the launch on Tuesday, Laura Hemrika, managing director of the Credit Suisse Foundation, said: “As a global bank, we see that we have a very important role to play in external financing towards the SDGs.
“We have been in many conversations where there is demand and interest from our clients and at the same time, not the opportunity to invest… this initiative is a key part of trying to address that issue.”
UBS chief executive Ralph Hamers, said in a statement: “It is critical to mobilise capital in all forms to tackle some of the world’s most pressing challenges.
“As a founding member of this important initiative, UBS Optimus Foundation is pleased to contribute five million Swiss francs plus its long-standing expertise in innovative impact investing and public-private partnerships to create measurable, sustainable change on a global scale.”
SECO will also look to improve framework conditions for impact investing in Switzerland by working with other parties including industry body, Swiss Sustainable Finance, and the State Secretariat for International Finance.