UBS plans to reduce carbon emissions 40% by 2012

Corporations owe it to society and the planet to manage their energy efficiently and sustainably. Although financial businesses emit relatively little carbon dioxide in comparison to heavy industry, UBS’s management firmly believes it has a responsibility to limit the pollution and waste its businesses create.

That is why, earlier this year, the Group Executive Board (GEB) set ambitious new emission reduction targets for UBS that foresee, by 2012, a 40% reduction in carbon emissions from 2004 levels.

To achieve this, UBS intends to invest in more energy efficient heating and offset the emissions it creates, such as that from business related air travel, by purchasing green energy certificates and offset credits. None of the planned measures will affect UBS’s growth plans as the level of carbon emissions will be controlled and managed independently of energy consumption and business growth.

For a number of years now, UBS has actively addressed the issue of climate change internally. It has introduced state-of-the-art energy saving technology in buildings, purchased green energy, and installed video conference facilities, helping reduce the need for air travel.

UBS’s efforts to cut its emissions have been noticed internationally. Business- Week, for example, in cooperation with The Climate Group, ranked the firm third in its 2004 list of companies that had achieved the most significant cuts in carbon emissions. The new targets are further evidence of the seriousness with which UBS is tackling climate change.

Betting on ethanol

The world’s first biofuel index, the UBS Diapason Global Biofuel Index, was launched in March. Published in US dollars, euros, Swiss francs and yen, the new index is based on ten futures contracts on commodities used in the production of ethanol and biodiesel.

UBS is seeking to satisfy growing demand from investors by launching the index. The index is the result of a partnership with Diapason, a leading company in commodity indices based in Lausanne, with which UBS has been working closely in the structuring and distribution of financial derivatives based on commodities.

Since the index is made up of futures contracts and there is no delivery of the underlying goods, it can be used by any type of investor, not just companies and institutional investors. Private investors can invest in structured products according to their investment objective, be it capital protection or yield enhancement. Financial institutions can also obtain licences to develop financial products based on the index.

Ethanol is an alcohol that can be extracted from a number of commodities, mainly cane and sugar beet, but also from other feedstock such as corn and rice. Of the two existing biofuels (the other being biodiesel), ethanol today accounts for approximately 85% of global consumption. Its weighting in the UBS Diapason Global Biofuel Index is 83% (biodiesel makes up the remaining 17%).