Switzerland’s Most Sustainable Cities

Switzerland is regarded as one of the greenest countries on the planet. In fact, Zurich is rated by many institutions as the world’s most environmentally conscious city. With sustainability on the minds of governments, scientists and businesses, it’s a topic that can’t be overlooked. Investments now and in the future can and will focus on this key issue. As such, IG has carried out its own research into Switzerland’s sustainability culture.

Our report ranks the greenest cities in Switzerland and breaks down the areas in which each thrives. The aim of the report is to highlight Switzerland’s commitment to sustainability. Moreover, the data should serve as an indicator of future trends and what other major cities might do to replicate Switzerland’s success. The aim is to consider possible growth areas and where investments may be best focused over the next decade.

Methodology

We used official government data sources from Switzerland’s eight largest cities to compile our report. These findings were combined with ratings from international agencies, including IQAir, the United Nations and the CDP. Our main areas of focus in determining sustainability were:

Air Quality: The number of pollutants in the air. The higher the score, the higher the number of pollutants.

Long-Term Pollution Index: The long-term air index weighted by population. Each score from 0-6 represents an increase in air pollution (1 is low, 6 is high).

Public Transport Usage: The number of people that chose public over private transport in 2018.

Recreational Areas: The percentage of a city dedicated to green open spaces.

Settled Areas: The amount of urban space compared to recreational space.

Carbon Dioxide Emissions: CO2 emissions per capita for Switzerland averaged across each city based on its population. *Note: Data was not readily available for this area so was excluded from the final results.

Findings

From the methodology used, Zurich emerged as Switzerland’s most sustainable city. Not only that, it’s the largest city in Switzerland, which makes its position at the top of the rankings even more impressive. In fact, Zurich is twice as populated as its nearest rival, Geneva, which ranks seventh on our list of sustainable Swiss cities.

Sustainable Cities in Switzerland Ranked

1. Zurich
2. Lausanne
3. Bern
4. Lucerne
5. St. Gall
6. Lugano
7. Geneva
8. Basel

Although Zurich performs consistently well across all metrics, its defining characteristic is public transport. 67.10% of the city’s 409,000+ residents use some form of public transport, equating to 671 people per 1,000 commuters. That’s better than any other Swiss city and one of the main reasons it has an air quality rating (21) that’s on par with the much smaller city of Lausanne.

Zurich may be Switzerland’s most sustainable city but it’s not the only focused on the future. With the environment a major talking point among politicians, scientists and, in turn, investors, Switzerland stands out as a bastion of ecological initiatives and innovations. Our data shows that the top eight cities are strong in all areas.

For example, data from the Institute for Fiscal Studies shows that only 14% of British workers use public transport. Even Lugano, the lowest-ranked Swiss city in this category, has twice the amount (28.80%) of public commuters. Therefore, as a country, Switzerland is ahead of many leading Western countries with regards to sustainability.

From an investment perspective, it pays to look at specifics. To understand where this country has been successful, how others can mirror this success and the sectors making it possible, we considered four key areas: Population Density, Long Term Pollution Index, Public Transport Usage, Recreational Areas (% per Km2).

Future Plans

So what’s next for Switzerland? It’s currently leading the way with regard to sustainability, but how do officials plan to keep things moving?

Basel Sustainability Highlights

• Individuals and businesses can get cash bonuses and tax breaks by using electricity more efficiently.
• The local government provides grants for energy-efficient renovations, efficient new buildings and the development of systems using renewable energy.
• Local taxi drivers can get a subsidy up to CHF 10,000 if they buy an electric car. Driving schools can also get financial assistance for doing the same.

Bern Sustainability Highlights

• EBP worked with Bern City Council to identify key areas of change. In a plan approved in 2014, city officials are aiming to fulfil 70% of Bern’s heating needs and 80% of total energy needs from renewable sources by 2035.
• Bern is utilising rooftop space for energy and conservation. For example, Stade de Suisse football stadium has solar panels on its roof that power 200 homes.
• Various buildings, including Hotel Schweizerhof Bern, are home to bee colonies.
• Everyone that stays in a hotel within the city of Bern can get a ticket that allows them to travel on public transport for free between zones 100 and 101.

Geneva Sustainability Highlights

• Geneva has created the Climate Smart Communities (CSC) Program and is making steps towards becoming a “smart city”.
• It now carries out energy audits on municipal buildings and suggests areas for improvement.
• Rain gardens are being used to manage stormwater runoff to help improve the city’s water usage.

Lausanne Sustainability Highlights

• This city encourages the use of public transport through the Guide Me Yodli app. This app not only tells users their transport options but informs them of their carbon footprint.
• Hotels and offices are switching to energy-saving LED lights, energy-generating photovoltaic cells and other sustainable energy sources.
• Academic institutions across the city have committed to reducing CO2 emissions and providing research into new areas of sustainability.

Lucerne Sustainability Highlights

• The local government promotes the use of public transport by offering all hotel guests free passes.
• The Lucerne Smart City Initiative is working to digitise many areas of public life in order to make the city more energy-efficient.
• Academics in Lucerne have been pivotal in creating Switzerland’s green fintech network, a series of initiatives pushing sustainability within the financial sector.

Lugano Sustainability Highlights

• Many hotels, including those owned by Best Western and Hotel Coronado, have installed solar panels to contribute to the city’s power needs.
• There are plans in place to reduce the intake of phosphates into Lake Lugano. The aim is to sustain the water and use it as a natural resource for generations to come.

St. Gall Sustainability Highlights

• A major driver of sustainability in St. Gall is the local university. It was the first Swiss university to sign the Global Climate Change letter.
• It now publishes various papers on climate control and the environment.
• It also runs a sustainable campus which wants to become CO2 neutral by 2030.

Zurich Sustainability Highlights

• Zurich has a dedicated government department for sustainable building that’s focused on creating a 2000-watt society through energy-efficient homes, office blocks and more.
• ABB (ASEA Brown Boveri), a Swedish-Swiss multinational headquartered in Zurich, has pledged to cut emissions and invest in renewable energy. This is a significant step for the company that deals in robotics, power, heavy electrical equipment, and automation technology because it’s a major presence in the city.

Stocks to Trade

With Switzerland leading the way with regards to sustainability and green initiatives, there are investment opportunities aplenty. As more major economies look to reduce their impact on the environment, Switzerland will inspire other nations to change.

However, it will be Swiss companies that lead the way. The following companies all have the potential to grow thanks to the environmental revolution. Therefore, as an investor sizing up potential options, they stand as five of the best Swiss stocks to trade right now.

BKW AG (Code: BKW SW Equity)

Energy is and will remain a hot topic in the sustainability debate. BKW Energie AG is at the forefront of the power product and distribution in Switzerland. From its HQ in Bern, this company provides electricity, heat and gas to Switzerland as well as parts of Italy, Germany and Austria.

BKW AG has a market cap of CHF 5.83 billion (£4.74 billion). Total returns from 2018 to 2020 were 86% and, in 2020 alone, thanks to projected revenue of CHF 3.8 billion (£3 billion), total returns hit 42.9%. This growth has been fuelled by a move towards renewable energy. As well as hydroelectric, solar and wind, BKW AG is developing biomass products and cleaning up its fossil fuel production.

ROMANDE ENE-REG (Code: HREN SW Equity)

Romande Energie Holding SA is another Swiss energy supplier. As part of its package, this company provides repairs and electrical services to its customers. In essence, it’s a fully autonomous entity that can distribute and manage electricity supplies across Switzerland. This set-up means Romande Energie Holding SA can operate more efficiently and, in turn, forge its own path within the energy sector.

Total returns between 2018 and 2020 were 5% and, in 2021, year-to-date returns hit 7.1%. The company has a market cap of CHF 1.36 billion (£1.10 billion) and revenue in 2020 is projected to be 625 million (£507 million). Romande Energie is aiming for 100% CO2 balance through the development of biomass and, most significantly, geothermal energy.

ABB LTD-REG (Code: ABBN SW Equity)

This Swedish-Swiss company has been pioneering new innovations in robotics and automation since 1988. It has ranked among the top 350 Fortune Global 500 companies for more than 20 years and, until the sale of its electricity division in 2020, it was Switzerland’s largest industrial employer.

Revenue for 2020 was CHF 24.5 billion (£19.9 billion), which generated a share return of 10.8%. ABB’s market cap is now in excess of CHF 56.56 billion (£45.94 billion) thanks to breakthroughs across multiple industries. As well as ABB software helping to reduce fuel consumption with artificial intelligence (AI), it’s pioneering new ways of processing data so that datacentres can be more energy efficient.

CREDIT SUISSE-REG (CSGN SW Equity)

The world famous Credit Suisse has been offering its financial services to the world since 1856. Today, this global wealth manager, investment bank and financial services firm has an international reputation for excellence. Moreover, it’s been a staple investment option for decades. In 2017, Credit Suisse had more than CHF 1.3 trillion (£1.05 trillion) of assets under its management. In 2021, it has a market cap of CHF 30.4 billion (£24.6 billion) with revenue from 2020 forecasted to be CHF 22.1 billion (£17.9 billion). Year-to-date returns for Credit Suisse have hit 7.9%.

Even as a financial services company, Credit Suisse is part of the Switzerland’s sustainability agenda. From its HQ in Zurich, the company has developed policies that are pushed out across its network. It’s working to meet ISO 14001 standards with regards to its energy management systems and become carbon neutral. Credit Suisse is also focused on social sustainability investments.

UBS GROUP AG (UBSG SW Equity)

This is another investment bank and financial services firm. It has two HQs, one in Zurich and one in Basel. UBS was founded in 1862 and, since then, it’s become one of the largest investment banks in the world with positions in the US, Asia, and EMEA. The market cap for UBS is CHF 52.57 billion (£42.71 billion) and revenue hit CHF 32.7 billion (£26.5 billion) in 2020. Returns were 8.4% in 2020 and year-to-date returns are 7.6%.

As well as its position in the financial sector, UBS is working to become a more sustainable company. It now has an entire division dedicated to sustainable investments. The portfolio is worth $97 billion (£69 billion) but its value is increasing. From wind and plant-based projects to sustainable data and electric cars, UBS is focusing its client’s investments on sustainability more than ever.

Methodology in Detail

The IG Sustainability in Switzerland Report focused on eight major cities. For each, we used official data to assess and provide ratings in the following areas:

City Information and Population: We took the latest data (2018) from the Federal Statistical Office for Switzerland about the population of each city. A larger population density can be linked to more efficient use of land, transport and energy. Thus, the greater the population density and better a city’s scores across all metrics, the better its sustainability rating was.

References:

• Federal Statistical Office
• O. Brilhante and J. Klaas, Green City Concept and a Method to Measure Green City Performance over Time Applied to Fifty Cities Globally: Influence of GDP, Population Size and Energy Efficiency
• J Persson, M Johansson, M Raimond Dit Yvon, J Hedrén, Monitoring a City: Exploring Sustainable-Development Indicators for European Cities, Swedish University of Agricultural Sciences

Air Quality and Long Term Pollution Index: This metric assessed the number of pollutants in the air. The higher the score, the higher the number of pollutants. This metric was combined with air quality to give an overall score ranging from 0-6.

Data was taken from the Swiss Federal Statistical Office and presents the long-term pollution index of the air within each given city. A score of 0 represents the lowest long-term projection of air pollution with each increment showing an increase in future pollution.

References:

• IQAir
• Swiss IG Air Quality Scraper Source Code

Public Transport Usage: This metric looks at the number of people using public transport in each city. To normalise the data and create fairer comparisons, the most popular forms of transport per 1,000 commuters was used and divided by the city’s population.

References:

• Federal Statistical Office

Recreational and Settled Areas: To assess the amount of space dedicated to greenery and/outdoor recreation, we looked at two metrics. In conjunction with guidance from the European Green City Index, we looked the amount of outdoor space, minus urban space, to get a complete picture of a city’s recreational dynamics.

References:

• Economist Intelligence Unit, European Green City Index

Non-Bias Weighting: After studying the data, we decided to use a non-bias, equal-weighted analysis. Although there are links between metrics, for example, public transport and lower emissions, we felt these weren’t strong enough to warrant a hierarchy. As such, all metrics should be considered individually important but also part of an overall sustainability strategy.

Overall Rank: Each city was ranked according to its overall scores in these areas: Air Quality, Long Term Pollution Index, Public Transport Use, Recreational Areas. Each area was normalised and standardised to ensure fair comparisons could be made, even with different scales and ranges being used. The normalised data allowed us to rate each city in specific areas and in an overall sense.