Swiss National Bank to face Credit Suisse and climate protests at fraught AGM

Important Points

Over 170 climate activists now own SNB shares. Climate activist Jonas Kampus told CNBC activists hoped the national focus on SNB following the Credit Suisse Crisis provides fertile grounds to promote concerns about climate risks.

Swiss National Bank's annual general meeting will be held in Bern, Switzerland on Friday amid protests over its actions on climate change as well as its role in selling Credit Suisse in an emergency to Swiss rival UBS.

Credit Suisse was saved by the central bank during a chaotic weekend of March when a massive flight of deposits and a plummeting stock price brought the 167 year-old institution close to collapse.

The deal is still mired in controversy, mainly due to the lack of investor involvement and the decision that was made unorthodoxly of erasing 15 billion Swiss Francs (16.8 billion dollars) of Credit Suisse At1 bonds.

The failure of Switzerland's second largest bank sparked widespread discontent, and damaged the long-held reputation Switzerland has for its financial stability. The bank's demise also occurred against a turbulent political background, as federal elections are scheduled for October.

The SNB's investment policies will be challenged by the network of climate activists who will use the SNB's unwelcome spotlight.

Contrary to many other major central banks, SNB is a publicly traded company. Just over half its 25 million Swiss Francs ($28,1 million) share capital, which includes various Swiss cantons and cantonal banks, are owned by public shareholders.

According to the SNB Coalition - a pressure group that was spun off from Alliance Climatique Suisse, an umbrella organization for 140 Swiss environmental groups - more than 170 climate activists now own SNB shares.

Climate campaigner Jonas Kampus said on CNBC that around 50 activist shareholders are expected to attend the AGM on Friday. The activists will make about a dozen speeches at the AGM. Outside the event, protests will be held.

The group wants the SNB's stockholdings in "companies which cause serious environmental damage or violate fundamental human rights" to be sold, citing the SNB's investment guidelines.

The campaigners highlighted SNB's holdings in Chevron and Shell as well as TotalEnergies. ExxonMobil. Repsol. Enbridge.

On Friday, members of the Ugandan community who object to TotalEnergies’ East African Crude Oil Pipeline will attend. One member plans to address the SNB Directorate directly on stage.

As part of the full withdrawal from fossil fuel investments activists demand that the SNB implements the "one-for-one rule" -- a requirement for capital designed to prevent insurers and banks from benefiting from activities detrimental to the transition to net zero.

The SNB will be required to reserve one Swiss franc from its own funds for every franc that is allocated to finance new fossil fuel exploration and extraction.

The central bank refused to schedule the three motions that the activists had submitted, citing legal reasons. On Wednesday, it said that it would not make any comments on the protest plans and instead directed CNBC to the formal agenda. Kampus claimed that the mere act of submitting motions had increased public and political awareness.

The SNB is under pressure from all directions, both public and political. The SNB has fallen behind other central banks in terms of actions taken, Kampus told CNBC by telephone. He added that the SNB's mandate for price stability and financial stabilty is "very narrow."

A motion in the parliament also supports the shareholders' cause, and has the support of lawmakers from the Green Party [center-right] to the Centre. This motion demands that the SNB mandate be extended to include climate and environmental risks.

The motion was filed by Green Party legislator Delphine Klopfenstein-Broggini on 16 March. It stated that the SNB's mandate did not allow it to fully take climate risk into account when making decisions or using monetary policy instruments.

The present initiative of the parliament is meant to guarantee this latitude and make it clear that SNB must consider climate risks when conducting monetary policies.

The motion states that climate risks "are classified worldwide as significant financial risk that can endanger price and financial stability." It concludes that "Switzerland’s overall interests" are served by the SNB taking proactive action on these issues, as other central bankers are doing.

Kampus and other activists hope that the focus on the SNB following the Credit Suisse crisis will provide fertile ground for advancing concerns about climate risks. He said the risk of climate change to the financial system is "several-times larger" than any potential fallout from the collapse of Credit Suisse.

Kampus stated, "We believe that the SNB has a similar window of opportunity in that perhaps this time they are a little more humble because they have also done some mistakes in relation to the Credit Suisse crash."

He said that the central banks has always claimed that climate risks are incorporated into their models, and that "there is no need for additional exchanges with the public about further transparency."

The SNB is very important to its work, and the public must trust it. The central bank is concerned about trust. To demand it without proving that they can be trusted in the long term is scary.

The SNB has long maintained that its passive strategy of investing in global indexes is part its mandate to be market neutral and that the central bank is not responsible for climate policy. Activists are hoping that mounting political pressure can eventually force legislation to change to expand the SNB's mission to include climate and human rights risks to price and financial stability.