Investment Strategies
UBS Trumpets Sustainabile Investment Moves

The banking and wealth management group sets out how it is meeting the demand for sustainable investment with concrete action.
As readers know, there has been a lot of commentary by wealth
management firms about they are doing to meet the needs for
environmentally-friendly investments, ie measures such as cutting
carbon emissions, and developing alternative energy sources and
new materials. It is now an established part of many firms’ sales
“pitches” to stress their green credentials. (That said, this
publication does not wade into the specific scientific
controversies over human-caused global warming and other issues,
which is outside its area of expertise. We start from the
assumption that a lot of people, including HNW individuals, are
sufficiently alarmed about pollution, global warming and
species/habitat loss that they are seeking solutions through
their investment strategies.)
The world’s largest wealth manager is UBS. It has a total of
$1.110 trillion in total sustainable investment assets, giving it
plenty of firepower in the space. To set out some ideas on
sustainable investing is Christian Leitz, head of corporate
responsibility management at UBS.
The editors are pleased to share these views and invite
responses. As ever, the editors don’t necessarily endorse all
views of guest writers. Email tom.burroughes@wealthbriefing.com
Many thousands of people both young and old are demonstrating
regularly on behalf of the climate. In the ongoing debate, the
role companies play in climate protection is also being
challenged.
At UBS, we firmly believe that sustainability is the order of the
day. It is clear to us that future economic growth, and thus that
of our bank, will only be possible through a responsible approach
to nature, people and society. For us, this clearly includes
climate protection.
As we see the future of our business in the area of
sustainability, we have been highly committed to promoting
sustainable investment for many years. We are not the only ones
doing so, because more than $30 trillion are already invested
sustainably worldwide - that corresponds to around 60 times
Switzerland’s economic capacity - and the trend continues to rise
significantly. According to the recently published Swiss market
study Sustainable Investments 2019, more and more
institutional investors in Switzerland are opting for sustainable
strategies.
Sustainable investment is becoming an increasingly important
business factor for UBS and something that our clients are
increasingly demanding. A key objective for us is to be a leader
in sustainable investment and impact investing for private and
institutional clients. As of 31 December 2018, our core SI
products and mandates, our most important area of sustainable
investment, stood at $313 billion, with a significant growth of
$182 billion in 2017.
Our range of sustainable investment products and services is
constantly growing. Last year, for example, we launched a
sustainable strategy fund for our Swiss clients - the SI Strategy
Fund - which is meeting with considerable interest. We offer our
private clients 100 per cent sustainable cross-investment
portfolios worldwide, including in Switzerland. In general, we
encourage our clients to invest sustainably, including in special
climate protection products.
These products are a central part of our climate strategy. We are
convinced that banks play an important role in the transition to
a low CO2 economy. Over the past few years, we at UBS have
therefore developed a comprehensive strategy to support the
transition process mentioned above and thus counter climate
change. This underscores our commitment to the United Nations
Sustainable Development Goals (SDGs) of affordable and clean
energy and climate change mitigation. We report in detail on the
implementation of our strategy, following the recommendations of
the Financial Stability Board’s Task Force on Climate-related
Financial Disclosures (TCFD) and the five-year roadmap set by
TCFD. The TCFD itself is directly linked to the 2015 Paris
Climate Change Agreement and calls on companies to disclose the
impact of climate change on their businesses.
In terms of products and services, UBS has very direct leverage,
especially in asset management. It has developed various products
that enable our clients to determine the weighted CO2 footprint
of their investments or adapt them to the Paris Agreement.
Transparency about the companies’ CO2 intensity is designed to
enable clients to make sustainable investment decisions.
The issue of the “Climate Aware” equity fund fits into this
picture. This enables investment in companies, which are prepared
for a low CO2 future. It is important that the fund reduces
commitments in enterprises with a higher CO2 risk, however, it
does not exclude them entirely. Instead, partnership-based
activism is pursued with these companies, in order to encourage
them to reduce CO2 emissions.
Our strategy also means that, in addition to the capital of
institutional investors, we encourage private investors to invest
in vehicles that promote climate protection and adaptation to
climate change. Climate-specific sustainable investments have
grown from $74 billion in 2017 to $87.5 billion in 2018. Finally,
in our capacity as advisors or lenders, we support the transition
to a low CO2 economy.
In concrete terms, our strategy also means that we have reduced
the financing of companies that have a negative impact on the
climate. We have reduced the proportion of CO2-relevant credit
exposures on our balance sheet to 1.2 per cent or $2.7 billion
(down 60 per cent in 2018 vs. 2017). The focus here is
specifically on companies in the energy (oil, gas, coal, etc.)
and electricity sectors.
Specifically when it comes to coal, UBS does not provide
project-specific financing for new coal-fired power plants. In
addition, we only conduct financial transactions with energy
service providers that generate more than 30 per cent of their
energy from coal if the service provider can demonstrate a
transitional strategy that is compatible with the Paris Agreement
or if the transaction is linked to renewable energies. Finally,
our bank has significantly reduced its lending and capital market
activities for the coal mining sector.
External ratings and experts confirm that we are on the right
track with our strategy for reaching the Paris climate change
goals. This includes, in particular, our renewed inclusion in
CDP’s Climate A List in 2018 (its highest award). We are also the
industry leader in the Dow Jones Sustainability Index for the
fourth consecutive year.
We are still a long way from reaching our goal. However, we hope
to set a good example and that our commitment will mobilize more
clients, partners and employees towards our goal.