Switzerland's banking sector, accused by critics of not doing enough to prevent so called "greenwashing", is pushing to keep regulating itself ahead of a decision that could lead to government oversight of sustainable finance.

Greenwashing involves an organisation making misleading sustainability-related claims to investors or consumers, usually to boost its reputation and bottom line. However, there is no legal definition of the term in Switzerland.

"The cabinet will give information this autumn on the further procedure in the matter of greenwashing," a spokesman for the Swiss Ministry of International Financial Affairs told Reuters ahead of a decision on whether to introduce state regulation.

The Swiss Bankers Association (SBA), which represents lenders like UBS (UBSG.S) and Julius Baer (BAER.S) as well as the country's smaller banks, wants to continue with self-regulation rather than be subject to tighter government rules.

But some say self-regulation does not go far enough.

"The financial industry argues that self-regulation is effective because it can be implemented and adapted quickly," said Stephan Kellenberger of the World Wide Fund for Nature (WWF), Switzerland.

But he said self-regulation often lacked tough targets and did not prevent greenwashing. "It is indispensable that sustainable products, for example, meet the requirements of the Paris climate targets."

The number of instances of greenwashing by banks and financial services companies around the world rose 70% in the past 12 months, according to RepRisk, a Swiss environmental, social and corporate governance data provider.

Switzerland, a huge centre for asset and wealth management, accounted for sustainable investments totalling around 1.6 trillion Swiss francs ($1.79 trillion) in 2022, according to Swiss Sustainable Finance (SSF), an industry association.

There are no figures on Swiss cases of greenwashing...