Case study: How UBS works with its clients and customers to encourage sustainable practices

Stakeholder identification and consultation

Please describe which stakeholders (or groups/ types of stakeholders) you have identified, consulted, engaged, collaborated or partnered with for the purpose of implementing the Principles and improving your bank’s impacts. This should include a high-level overview of how your bank has identified relevant stakeholders, what issues were addressed/results achieved and how they fed into the action planning process.

It is essential for UBS to regularly engage in conversations with a diverse range of stakeholders, including clients, employees, investors, policymakers, legislators, regulators, and representatives from the business community, society, and non-governmental organizations (NGOs), covering a broad spectrum of topics.

Through these interactions, UBS gains valuable insights into their objectives, expectations, and concerns. This understanding is crucial for UBS in managing issues that could have either a positive or negative influence on the firm and its stakeholders. More comprehensive details on how UBS interacts with its stakeholders can be found in the Supplement to the UBS Group Sustainability Report 2023, specifically in the section titled “Supporting our strategy through stakeholder engagement.”

Each year, UBS conducts a materiality assessment in accordance with the Global Reporting Initiative (GRI) Standards to effectively consider its stakeholders’ perspectives on key issues related to UBS’s economic, social, and environmental performance and impacts. Additional information on this approach is provided in the Supplementary Information section labelled “GRI-based materiality assessment.”

Moreover, UBS actively engages in political discussions to share its expertise regarding proposed regulatory and supervisory changes and to participate in conversations about sustainability and climate (for instance, through the International Institute of Finance (IIF), the Association for Financial Markets in Europe (AFME), and the Swiss Bankers Association (SBA)). UBS’s involvement in organizations and associations focused on sustainability and climate enables it to fulfill its commitments and support the transition to a low-carbon economy.

UBS will continue to adapt its approach in response to external developments and emerging best practices in the financial sector and climate science, which may also prompt UBS to reassess previously established voluntary commitments.

How did UBS work with its clients and customers to encourage sustainable practices and enable sustainable economic activities?

In its 2023 PRB Reporting and Self-Assessment Template UBS reports that it works with its clients and customers to encourage sustainable practices and enable sustainable economic activities as follows:

Assisting clients in navigating a structured transition to a low-carbon economy and develop climate-resilient business models is a central goal of UBS’s climate strategy, along with mobilizing private and institutional capital for this transition. Aligning its applicable lending and investment portfolios with the goals of the Paris Agreement is a significant aspect of this strategy, alongside the products and services UBS provides.

By offering innovative solutions in sustainable financing, investment, and capital markets, UBS aims to equip clients with the necessary options to achieve their specific sustainability goals while facilitating their transition to a low-carbon economy. UBS is in the process of developing cutting-edge advisory, lending, basic banking, and transition financing solutions. Additionally, UBS provides clients with access to a range of sustainable investment options. By merging tailored advice with its research, thematic insights, and data analytics, UBS strives to help clients better understand and mitigate risks, as well as identify new opportunities.

Through its ESG Advisory Group, UBS offers the critical perspective needed for clients to evaluate ESG issues throughout the corporate lifecycle and to analyse a corporation’s ESG profile from both business and investor viewpoints.

Effective management of sustainability and climate risks is a crucial aspect of UBS’s corporate responsibility. UBS implements a sustainability and climate risk policy framework across all relevant activities to help identify and manage potential negative impacts on the climate, environment, and human rights, along with associated risks for both its clients and UBS.

UBS has established standards and guidelines for product development, investment, financing, and supply chain management decisions. Additionally, UBS has created frameworks for sustainable lending, bond issuance, and GHG emissions trading products and services. These guidelines support UBS’s growth strategy for sustainable offerings while ensuring compliance with sustainability-related criteria.

UBS utilizes specific guidelines and assessment criteria for transactions with corporate clients involved in areas of concern. These guidelines and criteria apply to various activities, including loans, trade finance, direct investments in real estate and infrastructure, securities and loan underwriting transactions, investment banking advisory assignments and the procurement of goods and services from suppliers.

Transactions in these sectors necessitate an enhanced due diligence and approval process, which includes evaluating regulatory compliance, adherence to UBS’s controversial activities standards, and considering past and present environmental and human rights performance along with stakeholder group concerns.

Following the acquisition of Credit Suisse Group, sustainability and climate risk appetites were updated to establish unified standards for the merged entity, aimed at supporting mitigation efforts and reducing risk in the joint profile. UBS’s approach was chosen as the model for the combined risk appetite due to its broader applicability across sectors and more robust risk mitigation strategies. Former Credit Suisse standards were adopted in areas where UBS previously had limited business activity, such as shipping, project financing, and certain metals and mining sectors where UBS had not developed specific standards.

In addition to engagement, UBS considers proxy voting an integral part of its investment process and overall stewardship approach. UBS views it as a vital component of its fiduciary duty and has been exercising discretionary voting on its clients’ behalf since 1995 across both active and passive investment strategies.

UN Principles for Responsible Banking: Accelerating a positive global transition for people and the planet

With over 300 signatory banks representing almost half of the global banking industry, the Principles for Responsible Banking are the world’s foremost sustainable banking framework. Through these Principles, the banking community takes action to align core strategies, decision-making, lending and investment with the UN Sustainable Development Goals and international agreements such as the Paris Climate Agreement.

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References:

This case study is based on published information by UBS, located at the link below. For the sake of readability, we did not use brackets or ellipses. However, we made sure that the extra or missing words did not change the report’s meaning. If you would like to quote these written sources from the original please revert to the following link:

https://www.ubs.com/global/en/sustainability-impact/sustainability-reporting.html

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