LONDON – Switzerland’s UBS (UBSG.S) said the value of its ‘sustainable’ investments rose by more than 50% to nearly $500 billion in 2019, while lending to the energy and utilities sectors fell by 40% as it tightened its rules.
UBS, which has assets of more than 3.6 trillion Swiss francs ($3.76 trillion) and invests for some of the world’s richest individuals, has increasingly looked to carve out a market-leading position in sustainable investing.
That comes as policymakers and regulators push financial institutions to do more to help accelerate a global push to a low-carbon economy and meet the United Nations Sustainable Development Goals, tackling poverty and other global challenges.
“As the world’s largest truly global wealth manager, we have a responsibility to take a leading role in shaping a positive future for everyone, including future generations,” UBS Chairman Axel Weber said in a statement.
“We aim to be the financial provider of choice for clients who want to engage toward the achievement of the United Nations Sustainable Development Goals (UN SDGs) while helping achieve an orderly transition to a low-carbon economy.”
What counts as ‘sustainable’ varies across institutions, but can range from simply reflecting environmental, social and governance-related risks in the investment process, to ‘impact investing’, backing projects aiming to provide a measurable positive impact on society.
UBS defines all of these as ‘core’ sustainable investments and said they had collectively risen to $488 billion by the end of the year, or 13.5% of total invested assets, up from $312.9 billion a year earlier.
The value of equity and debt capital market deals and financial advisory services linked to climate change mitigation and adaptation hit $87.2 billion in 2019, up from $56.5 billion in 2018.
Bank lending to the energy and utilities sectors fell more than 40% to $1.9 billion in 2019, equivalent to just 0.8% of its total gross banking products exposure, down from 1.6% at the end of 2018.
Since the end of the year, UBS said it had further toughened its guidelines for lending to the sector, including not financing new greenfield thermal coal mines, offshore oil projects in the Arctic or greenfield oil sands projects.
It would also only provide financing to companies with greater than 30% of reserves or production in Arctic oil and/or oil sands if the money was to be used on renewable energy or conventional oil and gas assets.
Transactions linked to Liquefied Natural Gas infrastructure and ultra-deepwater drilling, meanwhile, would face enhanced environmental and social due diligence, the bank said.
Corporate lending to climate-sensitive sectors was $37.6 billion in 2019, or some 15.5% of the group’s total $242.6 billion in lending, with the biggest slice of that, $15 billion, for the real estate sector.
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