UBS gears for sustainability in its global operations

 

By Rose de la Cruz

 

UBS, the leading investment in the Philippines and consistently ranked top 2 among international investment banks, is gearing its global operations on the sustainability track by adopting tougher standards on coal finance and doubling its core sustainable investments at $313 billion (up 72 percent) in 2018 and in the coming years.

 

In a statement, Christian Bluhm, Group Chief Risk Officer, said the bank’s priority is to protect clients’ assets and UBS from the materialization of risks, including climate-related risks since sustainable financing is high on its 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," he stressed.

 

He said UBS transitioned to “low-carbon economy, with about 60 percent drop in carbon related assets to $2.7 billion.”

 

Also, the bank Improved the wellbeing of 2.8 million children globally, up 33 percent, by supporting innovative finance from the Optimus Foundation, through the launch of Development Impact Bonds in education and health care.

 

It noted that global energy consumption hit an at all-time low and the bank is looking at fully running operations on renewable electricity by end of 2020.

 

UBS is now the industry leader in sustainability, validated by major ratings including MSCI ESG Research and Dow Jones Sustainability Indices.

 

He said UBS made significant progress in 2018 toward meeting its ambitious targets in sustainable investing, philanthropy and business sustainability, while further reducing its environmental footprint.

 

The bank continues to set standards for the wider industry by retaining its leadership in the Dow Jones Sustainability Indices (DJSI), the most widely recognized sustainability rating, with the MSCI ESG Research upgrading the bank to AA in its latest sustainability ratings, placing it in the top three of its primary peer group.

 

Sustainalytics, the ESG ratings and research analysts, also ranked UBS as an industry leader, while CDP confirmed the bank's position on its Climate A List. Chairman Axel A. Weber emphasizes: "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," he said.

 

The bank is developing sustainable and impact investing products, which combine a financial return with a "societal return." As of Dec. 31, 2018, total SI assets represented $1.110 trillion and core SI assets $313 billion, constituting 35.8 and 10.1 percent, respectively of UBS total invested assets.

 

In 2018, the bank directed $1.9 billion of client assets into SDG related impact investments, making further progress to reaching a goal of $5 billion in commitments by end of 2021.

 

He said the bank believes the transition to a low-carbon economy is vital and is focused on supporting clients in preparing for success in an increasingly carbon-constrained world. UBS has reduced its carbon-related assets to $2.7 billion, down from $6.6 billion in 2017, while climate-related sustainable investments increased to $87.5 billion from $74 billion in the previous year.

 

He said 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 percent 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.

 

UBS significantly reduced lending and capital raising to the coal mining sector and cut support to coal-mining companies engaged in mountain-top removal operations.

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