SNB board member speaks on ‘very limited' ethical investment programme

Fritz Zurbrügg, a member of the Swiss National Bank (SNB) governing board, has given a speech outlining the limits and challenges of the bank's evolving investment strategy – including more details on its new approach to ethical investing.

Addressing the SNB's money market event in Zurich, he said the SNB's defence of the ceiling of 1.20 Swiss francs to the euro meant that since 2009, the central bank's currency reserves have increased by a factor of about six, and the foreign exchange reserves by almost ten times, putting them at more than 70% of Switzerland's annual GDP.

The bank has relatively recently diversified its holdings into equities, as its concept of liquidity has evolved from being defined as a function of the terms of its bond holdings, to now being defined by how quickly assets could be sold "with the minimum possible impact on the market".

This desire not to move markets is also behind the decision not to provide details on the bank's new ethical investment strategy, beyond saying it will not invest in "companies which produce internationally banned weapons, seriously violate fundamental human rights or systematically cause severe environmental damage".

To ensure the SNB's investments remain diversified, Zurbrügg said the number of excluded companies is "very limited". He said the SNB would not expand on how it decided which companies to exclude, or name the excluded companies, as that might "go against our principle of ensuring the minimum possible impact on the market".