Investment bank UBS is making strides in their sustainable investing (SI) initiatives. The bank is developing sustainable and impact investing products, which combine a financial return with a “societal return.”
As of 31 December 2018, UBS had total SI assets represented US$1,110bn and core SI assets US$313bn, constituting 35.8% and 10.1% of total invested assets respectively. In 2018, UBS’s core SI assets, involving ESG integration as well as a range of sustainability strategies, increased 72%, up from US$182bn in 2017, mainly driven by the integration of ESG factors into UBS Asset Management’s investment research process across a significant portion of assets managed within their active capabilities.
“We see a strong business rationale for catering to the growing importance of and demand for sustainability. We have set ourselves the goal to create long-term positive value for clients, employees, investors and society. Our goal carries with it a clear responsibility for taking a leading role driving change towards a positive future”, said Axel A. Weber, Chairman.
The bank directed US$1.9bn of client assets into UN Sustainable Development Goals (SDG) related impact investments, making further progress to reaching a goal of US$5bn in commitments by end of 2021.
UBS also decided to further tighten standards on coal financing transactions. The bank is committed to not providing project-level finance to new coal-fired power plants globally, to only supporting financing transactions of existing coal-fired operators (which are more than 30% reliant on coal) who have a transition strategy in place that aligns with a pathway under the Paris Agreement, or the transaction is related to renewable energy.
“It’s our priority to protect our clients’ assets and UBS from the materialization of risks. This includes climate-related risks since sustainable financing is high on our agenda. We already limited our risk appetite for carbon-related assets and have further tightened our standards on coal-financing transactions while growing our exposure in climate-related sustainable asset classes,” Christian Bluhm, Group Chief Risk Office said.