Monetary policy: SNB criticized for investing in fracking companies

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The Swiss Climate Alliance has been putting pressure on the National Bank for months. It calls for abandoning investments in companies involved in fracking. Allianz submitted a petition with 60,000 signatures to the institute on Monday.

According to a coalition of various organizations, the SNB currently holds securities of 69 fracking companies worth $9 billion. Allianz calculates that the Central Bank is therefore responsible for 7 million tonnes of CO2 emissions annually.

“As a shareholder, SNB is a co-owner”

Fracking is a controversial way to extract oil or natural gas. A fluid is pressed into the ground at high pressure to make the rock more permeable. Critics warn of environmentally harmful emissions and possible dangers to groundwater. That’s why some countries have banned fracking.

Environmental protection organization Greenpeace is also part of the alliance. Campaigner and financial expert Peter Haberstich explains: “As a shareholder, the SNB co-owns these fracking companies. Therefore, they are jointly responsible for climate and environmental damage.”

Haberstich says it would be a very strong signal if the SNB sold its shares in companies and communicated this clearly. “This increases financial risk for anyone who relies on fracking.” This can also lead to higher capital costs, such as increased interest rates, and therefore higher prices for produced gas.

“We evaluate these criteria regularly”

St. Reto Föllmi, professor of economics at the University of St. Gallen, explains that the rapid sale of securities will put downward pressure on the shares of fracking companies. “Of course, this depends on the liquidity in the market and the size of the share package held by the SNB.”

However, Föllmi does not believe that the sale of securities will affect the cost of capital. “Financing costs will not change much as long as there are investors around the world willing to invest in fracking companies.” Investors will take advantage of buying opportunities arising from temporarily falling share prices. “If you want to prevent fracking, measures such as taxes on gas or outright bans are more effective.”

Loud criticism of the Climate Alliance is also heard by the Central Bank. At a press conference last Thursday, board member Thomas Moser explained that the SNB has had investment exclusion criteria since 2013. “We have a very clear process and we evaluate these criteria regularly.”

The Central Bank has already announced that it will exclude companies operating in thermal coal mining at the end of 2020. However, the institute does not comment on individual positions in the portfolio. (SDA)

Source :Blick