Swisscanto ESG sovereign rating: Why is Switzerland falling from the podium?
Switzerland has lost ground in the Swisscanto ESG sovereign rating 2025 compared to the previous year. The ratings of countries like Germany, Italy, and Spain are also shifting – a development that should interest investors in government bonds.
Author: Fabio Pellizzari
The three key takeaways from the Swisscanto ESG sovereign rating 2025:
- In the Swisscanto ESG Sovereign Rating conducted by the Asset Management team of Zürcher Kantonalbank, Switzerland drops from 3rd to 4th place compared to the previous year. This is primarily due to the Social (S) dimension.
- Nordic countries continue to dominate the top ranks, with New Zealand being the only non-European country in the top ten.
- Despite political challenges, countries worldwide have made progress in sustainability, including emerging markets. This is a positive development for investors in government bonds, as data shows a correlation between sustainability and creditworthiness.
Switzerland must relinquish its podium position in terms of sustainability. This is the finding of this year’s Swisscanto ESG Sovereign Rating (see ranking below), compiled by the sustainability experts in the Asset Management division of Zürcher Kantonalbank.
While Switzerland climbed to 3rd place in 2024 in the ranking, which evaluates 199 countries worldwide based on their performance in the Environmental, Social, and Governance (ESG) dimensions, the country has now slipped back to 4th place. It is now ranked behind Denmark, Norway, and Iceland. What are the reasons for this decline?
Switzerland in the Swisscanto ESG sovereign rating: Gains in the environmental dimension
An analysis of the data reveals that Switzerland performed slightly worse in the Social (S) dimension compared to the previous year, even though it maintained or slightly improved its absolute performance in most areas. This relative decline suggests that other countries in the group made stronger progress.
In the Governance (G) dimension, Switzerland fell in the Basel AML Index, which we consider as a factor. This may be due to weaknesses in implementing anti-money laundering measures, international criticism of financial transparency, or new global standards imposing stricter requirements. Additionally, the score for financial stability worsened, potentially reflecting economic uncertainties, risks in the banking sector, or increased vulnerability in the financial system.
On the other hand, Switzerland made further progress in the Environmental (E) dimension, which includes criteria such as environmental protection, the adoption of renewable energy, water consumption, and biodiversity. However, these improvements were not sufficient to maintain its overall ESG rating, which dropped from 98.46 in the previous year to 97.67.
Although this is only a slight decline, it was enough for Switzerland to be overtaken by countries like Norway, which has been developing more sustainably. The Scandinavian country made a significant leap, climbing three ranks after a decline last year – the largest jump among the top 20 countries alongside Lithuania – and now ranks 2nd in the Swisscanto ESG Sovereign Rating. This improvement is primarily due to progress in environmental areas such as energy, energy productivity, and biodiversity.
How the Swisscanto ESG sovereign rating works:
The rating is based on the Swisscanto ESG Score, which evaluates countries based on around 80 ESG factors. The Environmental dimension primarily assesses values related to resource consumption and efficiency, such as water and waste, climate change, mobility, and biodiversity (nature conservation and agriculture). The Social dimension evaluates indicators related to the standard of living, public health, and equality. Finally, the Governance dimension considers indicators of a country's international engagement, its handling of human rights, and safety and stability. The data used comes from various independent sources, such as WHO, World Bank, UNEP, or OECD.
Swisscanto ESG sovereign rating: High scores worldwide despite political challenges
As in the previous year, Nordic countries dominate the ranking, with Denmark at the top and Iceland now in 3rd place. The DACH region (Germany, Austria, and Switzerland) showed mixed developments compared to 2024. While Switzerland experienced the aforementioned decline, Austria improved from 14th to 13th place. Germany remains steady in 9th place.
In Southern Europe, Italy climbed two ranks to 37th place, while Spain dropped three ranks to 30th. Both countries are relatively strong in the Governance dimension, which evaluates diverse criteria such as human rights, financial stability, and contract enforcement.
Meanwhile, Estonia from the Baltic region entered the top ten, and Uruguay (ranked 17th) is the only emerging market country in the top 20. The top 20 also include New Zealand, Australia, and Canada. This indicates that sustainable development is being prioritized outside Europe as well – an interesting finding given current political trends. Notably, the United States dropped two ranks compared to the previous year, according to the Swisscanto ESG Sovereign Rating criteria. The administration of former U.S. President Donald Trump was known for not prioritizing sustainability.
Swisscanto ESG sovereign rating: The top 20 in 2025
Rank |
Country |
ESG Overall Rating |
Rating E |
Rating S |
Rating G |
1 |
Denmark |
100 |
81.42 |
89.36 |
100 |
2 |
Norway |
98.32 |
89.04 |
81.46 |
98.63 |
3 |
Iceland |
97.89 |
98.9 |
92.36 |
94.3 |
4 |
Switzerland |
97.67 |
75.58 |
91.75 |
97.41 |
5 |
New Zealand |
95.8 |
64.45 |
81.27 |
99 |
6 |
Sweden |
93.94 |
52.21 |
90.08 |
96.45 |
7 |
Luxembourg |
93.52 |
78.71 |
82.3 |
93.97 |
8 |
Netherlands |
93.36 |
74.01 |
85.9 |
93.64 |
9 |
Germany |
91.7 |
71.47 |
88.26 |
91.42 |
10 |
Estonia |
91.52 |
60.52 |
83.44 |
93.79 |
11 |
Australia |
90.81 |
52.34 |
81.62 |
94.46 |
12 |
Finland |
90.75 |
36.74 |
85.39 |
95.72 |
13 |
Austria |
90.73 |
74.19 |
87.83 |
89.94 |
14 |
United Kingdom |
90.25 |
72.58 |
89.6 |
89.17 |
15 |
Liechtenstein |
88.22 |
69.01 |
82.74 |
88.7 |
16 |
Canada |
86.74 |
66.63 |
80.62 |
87.69 |
17 |
Uruguay |
86.71 |
97.63 |
65.36 |
86.73 |
18 |
Czech Republic |
86.34 |
56.14 |
82.11 |
88.32 |
19 |
Lithuania |
85.47 |
75.47 |
66.23 |
88.1 |
20 |
Ireland |
85.22 |
89.99 |
77.63 |
83.22 |
Source: Zürcher Kantonalbank (as of October 2025)
Swisscanto ESG Sovereign Rating: Observed Correlation with Productivity and Creditworthiness
Sustainable investment themes have been making a comeback in the stock markets. At the sovereign level, our data has long shown a correlation between sustainability ratings and economic factors such as GDP per capita or creditworthiness.
The rating serves as a valuable source of information for assessing economies and their productivity. ESG analysis of countries complements the economic evaluations of rating agencies and acts as an additional indicator for evaluating sovereign debtors.
This is particularly relevant for our active Swisscanto bond funds, which invest in government bonds based on a sustainability framework we have developed. This approach is reflected in the transparent sustainability profiles of our fund solutions and in the quarterly Sustainability Reports (see information below).
Sustainability reports of our active bond funds
Fund name |
Link to sustainability report |
| Swisscanto (CH) Bond Fund Responsible Global Rates | Link |
Swisscanto (LU) Bond Fund Committed Global Rates |
|
| Swisscanto (CH) Bond Fund Responsible Global Aggregate | Link |
| Swisscanto (CH) Bond Fund Sustainable Global Aggregate | Link |
Swisscanto (LU) Bond Fund Sustainable Global Aggregate |
|
Swisscanto (LU) Bond Fund Committed Emerging Markets Opportunities |
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