Switzerland, UBS, and Credit Suisse jointly Launch Impact Investing Initiative Focused on SDGs

Published on: 8 December 2021 10:20 AM
by KnowESG

A Brief Summary

Switzerland has launched a new public-private partnership to raise up to 1 billion Swiss francs ($1.09 billion) for social and environmental projects. The Sustainable Development Goals Impact Finance Initiative is one of a number of 'blended finance' funds to launch in recent months. Switzerland is home to one of the United Nations' two international headquarters. Impact investing aims to generate measurable environmental and social impact alongside financial returns. Credit Suisse and UBS say they plan to tap their international networks of wealthy private and institutional investors for the initiative's running costs.

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Switzerland has announced the formation of a new public-private partnership to raise up to $1.09 billion for social and environmental projects in underdeveloped nations.

The Sustainable Development Goals Impact Finance Initiative is one of several 'blended finance' projects that have launched in recent months to help poorer countries ramp up investment - a main focus at the recent COP26 climate summit.

The objective is that by combining money and investing know-how from banks and government agencies, private investors will flock to initiatives in emerging countries that advance the United Nations Sustainable Development Goals (SDGs).

Blended finance initiatives like this are becoming increasingly important for funding social programs like health and education, as well as supporting innovative energy and infrastructure projects like the United Nations' recent private-public investment to distribute solar energy to off-grid communities in Kenya.

In addition, the United Nations recently assisted in the launch of a blended finance plan to fund coral reef protection.

UBS and Credit Suisse, Switzerland's two largest banks, will join the new effort alongside the Swiss government's State Secretariat for Economic Affairs (SECO) and its Agency for Development and Cooperation (ADC) (SDC).

In a statement, SECO's State Secretary Marie-Gabrielle Ineichen-Fleisch said, "It's all about collaboration and joining forces... to generate more financing for the SDGs in developing countries."

Switzerland is home to one of the two international offices of the United Nations, as well as a leading financial centre for managing individual wealth.

By giving grants and early-stage investment for innovative ideas, the program wants to help scale up impact investing, which attempts to provide verifiable environmental and social effects alongside financial rewards.

Projects in emerging markets are regarded as too hazardous by many private sector investors. Blended financing projects, which bring together public and philanthropic investors with the private sector, aim to alleviate these problems.

The new Swiss initiative will look at measures to reduce private investor risks, such as the public investor assuming the first portion of any losses or giving guarantees.

"We're running out of time to meet the (Sustainable Development Goals), and if we want to bridge that capital gap, the moment is now for us to really be taking action," UBS Optimus Foundation's Dhun Davar told.

The Swiss government will donate 19.5 million francs toward the initiative's goal of raising 100 million francs in public and philanthropic finance, with the UBS Optimus Foundation providing another 5 million francs.

They're also in talks with additional backers, ranging from development banks and foundations to businesses and financial organizations.

Credit Suisse and UBS have stated that they want to use their international networks of rich individual and institutional investors to help assess initiatives and finance the initiative's operating costs.